Joaquin A. Rubalcaba (The Robert Wood Johnson Center for Health Policy at UNM)

Happiness as a vehicle to measure the value of non-market goods has begun to attract the attention of researchers across many fields.  In the context of health and public policy, the happiness method provides another tool for non-market valuation that can be applied to cost benefit analysis (CBA).  Although well-established approaches (revealed and stated preferences) have led to long debated and developed methods, happiness for the purpose of valuation has only begun to appear in the literature.  

Despite the growing popularity of the happiness research some are critical in its application for non-market valuation.  Researchers who are unhappy with the happiness method have questioned the validity of happiness as proxy for utility.  Previous literature has applied this method to value environmental quality.  More recently researchers have considered applying the happiness method, used by environmental economist, to value health quality and health shocks.  Although there is a push toward happiness there has yet to be a serious consideration for validating the method.  Validation has been critical in developing other valuation methods such as hedonic pricing (revealed preference approach) and contingent valuation (stated preference approach).

This paper has two objectives.  First, I provide evidence for the validity of the happiness method in the context of valuing health quality.  Secondly, I provide the monetary value of an incremental change in health quality using the happiness method.

To achieve the first objective I consider the assessment of content validity, construct validity, and criterion validity often applied to the contingent valuation method. The second object is achieved by estimating the marginal willingness to pay for health using both the General Social Survey (GSS) and the Health and Retirement Survey (HRS). Validating the use of the happiness method will provide public and health policy researchers a path to use existing happiness data sets such as the General Social Survey (GSS) for non-market valuation.