Adaptation to Health States: A Micro-Econometric Approach

Health care funding decisions in the UK are based on valuations of the general public. However, it has been shown that there is a disparity between a hypothetical valuation of the impact of a specific condition on health and the effect of that health state by someone who experiences it. This paper examines the issue of adaptation to health states, which partially may explain the discrepancy between hypothetical and experienced health state valuations. We use the British Cohort Study (BCS70) which is a longitudinal dataset that tracks a sample of British individuals since their birth in 1970. We use four BCS70 waves containing information on self-assessed health (SAH), morbidity as well as a number of socio-economic characteristics. To estimate the issue of adaptation, we implement a dynamic ordered probit model that controls for (health) state dependence. The empirical specification controls for morbidity and also includes a variable for the duration of the illness. We find that, for most chronic conditions, duration has a positive impact on self-assessed health, while for some conditions-such as diabetes- this does not occur. We interpret our results as evidence in support of the hypothesis that adaptation to chronic diseases exists and may explain at least in part the differences between general public and patients’ health state valuations.