1. INTANGIBLE COSTS OF ALCOHOL DEPENDENCY AS A PUBLIC GOOD: AN ESTIMATE FOR SWITZERLAND BASED ON CONTINGENT VALUATION SURVEY Sonia Pellegrini, Claude Jeanrenaud Institute for Economic and Regional Research (IRER), University of Neuchâtel, Switzerland. Method Contingent valuation method (CV) In health economics, CV is a widespread approach to elicit the value people attribute to a health improvement (Diener 1998, Olsen 2000). CV is a preference based approach. It uses a questionnaire to elicit people’s willingness-to-pay for a specific change in their health state. Scenario Interviewees were asked to express their WTP in order to re- duce by half the incidence of alcohol dependency. Health as a public good Since in our scenario the benefits are for the population at large and not directly related to payment, health has the characteristics of a public good. Quota sampling Respondents’ representativeness of the Swiss population is based on sex, age and social stratum. Survey 150 individuals among the general population aged 18 and over were interviewed in July 2000. Results Acceptance rate of the contingent market is of 75%, which is high. Mean WTP is of CHF 3,140 per case. On average Swiss households are prepared to pay CHF 3,140 to reduce the number of alcohol-dependent individuals by one unit. Given an incidence of approximately 15,000 new cases per year, the annual human costs of alcohol dependency are estimated at CHF 47.1 million. Internal validity of the contingent market was checked. It appeared that the income, the number of children and the health state significantly and positively influenced the WTP. Discussion Altruistic value Reason for paying is the satisfaction derived from the reduction of other people’s suffering. This is the most frequently given answer (62% of respondents). Option or use value The respondent considers that himself or one of his relatives could one day benefit from the program. That reason is mentioned by 30% of respondents. Non monetary external benefit Decreased insecurity on roads as well as the reduction of violent behaviors are mentioned by 30% of respondents. External monetary benefit Expectation of diminished health expenditures and insurance pre- miums is seldom mentioned. Estimated value Compared with amounts found in literature for other health impairments, the estimated annual intangible costs of alcohol dependency is low. Possible explanations are: Framework According to DSM-IV and ICD-10 criteria, alcohol dependency is defined by both behavioral and physiological (withdrawal and tolerance) features that indicate chronic and repetitive alcohol use despite adverse social, beha- vioral, occupational, legal, or medical consequences. Alcohol dependency represents a heavy burden in terms of human suffering and loss of quality of life for alcohol-dependent indivi- duals and their relatives. In Switzerland, 300,000 individuals, i.e. 4.8% of the population, suffer from alcohol dependency. Aim The aim of the study is to give an estimation of the intangible costs of alcohol dependency as a public good. It is a part of a larger report commissioned by the Swiss Federal Office of Public Health aimed at valuing the social cost of alcohol consumption in Switzerland. Economic valuation of health states generally consider the direct and indirect costs, that is the medical expenses and production losses due to work impairment. That perspective ignores an important part of the damages due to the illness: the loss of quality of life. Intangible costs Intangible costs are defined as the lost quality of life for the patient and his relatives in case of alcohol dependency. They express – in monetary terms – the diminished well-being due to psychological and physical suffering. Knowing motivations for paying helps understanding the meaning of the stated amounts: ** denotes significance at the 1% level. * denotes significance at the 10% level. Contact Institute for Economic and Regional Research (IRER) University of Neuchâtel Pierre-à-Mazel 7, 2000 Neuchâtel, Switzerland Tel. 0041 32 718 14 71 e-mail: sonia.pellegrini@unine.ch Presenting the illness as a public good implies, besides potential ethical or strategic behavior, the possibility of respondents acting as free riders. Alcohol dependency is not perceived as a fatality by the major part of the population. On the contrary, they think that alcoholics have placed themselves voluntarily at risk. When the victim exposes himself of his own free will, Jones-Lee (1994) shows that the WTP on the part of society in order to repair the damage is lower.