Are North Americans Willing-to-Pay More for Life and Limb?

OBJECTIVES: The United States (U.S.) spend more on health per capita than any other country. Analysts believe that the difference is due to higher prices in the U.S. compared to other jurisdictions. In order to shed light on the willingness-to-pay (WTP) for life and limb in different regions, we analyzed the worldwide economic literature on the WTP for a “statistical life” (VSL), which reported empirical estimates on the basis of revealed or stated preferences, spanning years 1995 through 2020.

METHODS: By way of a systematic literature search in the EconBiz and EconLit databases, we identified 156 studies reporting 169 unique estimates for the VSL. We transformed the VSL data into estimates of the implied WTP per life year gained (WTP/LYG), and compared the results by regional origin (North America, Europe, Asia) and by annual gross domestic product (GDP) per capita. For OLS regression analyses, we used WTP/LYG estimates after log-transformation.

RESULTS: In our analysis, the worldwide median WTP for a statistical life year (or WTP/LYG) was €168,367 (mean, €256,701) or 6.3 times annual GDP/capita. The median WTP/LYG [per GDP/capita] showed substantial differences by regional origin of data; studies with North American samples (n=52, €288,994 [7.2]) revealed much higher WTP/LYG estimates than studies with data originating from European (n=55, €168,367 [5.2]) or Asian (n=45, €45,260 [4.5]) survey populations. The differences between the WTP/LYG estimates remained statistically significant even after adjusting for GDP/capita (7.2 times GDP/capita [95%-CI, 6.7–8.7] in North America, 5.2 [4.7–6.3] in Europe, 4.5 [3.6–11.1] in Asia).

CONCLUSIONS: Higher prices of health care in the U.S. may, among other reasons, be attributable to higher WTP compared to other regions, in particular Europe. Our interpretation seems consistent with the large body of evidence showing a positive income elasticity of health expenditures, but may warrant further scientific inquiry.