ABSTRACT
According to the World Health Organization, obesity is one of the greatest public-health challenges of the 21st century. Body weight is also known to affect individuals' self-esteem and interpersonal relationships, including romantic ones. We estimate the "utility-maximizing" Body Mass Index (BMI) and calculate the implied monetary value of changes in both individual and spousal BMI, using the compensating income variation method and data from the Swiss Household Panel. We employ the Oster's method (Oster, 2019) to estimate the degree of omitted variable bias in the effect of BMI on life satisfaction. Results suggest that the optimal own BMI is 27.1 and 20.1 for men and women, respectively. The annual value of reaching optimal weight ranges from $7069 for women with underweight to $88,709 for women with obesity and between $95,165 for men with underweight to $32,644 for men with obesity. On average, women value reduction in their own BMI about four times higher than reduction in their spouse's BMI. Men, on the other hand, value a reduction in their spouse's BMI almost twice as much compared to a reduction in their own BMI. This highlights important gender differences and relative effects based on spousal BMI.
ABSTRACT
Knowing the monetary value individuals place on health is essential in tackling resource allocation between health and other uses. However, health conditions vary greatly, not only with respect to main characteristics but also by severity and duration. We apply the compensating income variation (CIV) method to data from the Swiss Household Panel, years 2004-2019, to explore the sensitivity of CIV estimates to severity and adaptation across five different health conditions: headaches, back problems, sleep problems, fatigue, and chronic illness. Accounting for income endogeneity in the life-satisfaction equations and adjusting for individual random effects, we found the CIV estimates to range from $3184 for moderate headaches (women) to $100,066 for severe fatigue (men). Individuals with severe conditions needed to be compensated about three times more than those suffering less. Across the five conditions with two severity levels explored for adaptation, individuals only adapted to moderate headaches and severe sleep problems. In conclusion, not only does the value of health conditions vary greatly, but within each health condition its value on average triples when severe condition is reported as opposed to moderate. Adaptation plays a minor role in CIV estimates for the five health conditions explored.
