An extra hour of informal care is worth between 9-10 euros to the caregiver, shows recent research on the monetary value of informal care using an innovative well-being valuation method.
The authors of the study, Barcelona GSE Affiliated Professor and ICREA-IAE Researcher Ada Ferrer-i-Carbonell and Free University of Amsterdam Researcher Bernard van den Berg, revealed that the extra hour of care was worth 8 or 9 Euros if the care recipient is a family member and about 7 or 9 Euros if not. Moreover, when applying the contingent valuation method to the same sample, the value obtained was 10.52 Euros per hour.
The "well-being valuation method" looks at the economics of interventions in healthcare from a societal perspective. Ferrer-i-Carbonell describes it as “a very simple instrument that allows the researcher to capture all the relevant costs and benefits related to a health problem to the extent that they affect an individual’s utility. In addition, and since individuals are only asked to provide information about their own situation, such a method does not suffer from biases due to strategic behavior and the response rate is larger than when hypothetical questions are used”.
Previous analyses have generally examined the problem using “opportunity cost” and “proxy good” methods, both of which have significant limitations; the former considers only the foregone earnings of the informal caregiver, regardless of the utility that a caregiver might derive from providing the care, whereas the latter values informal care at the price of a market substitute, e.g. professional home care, thereby assuming that informal care and professional care are perfect substitutes.
This novel new valuation tool was revealed in “Monetary Valuation of Informal Care: The Well-Being Valuation Method”, published in November 2007 in Health Economics. The study examines the impact of providing informal care, taking into account all costs and benefits incurred by the caregiver by looking at their self-reported subjective well-being.
Barcelona GSE Affiliated Professor and ICREA-IAE Researcher Ada Ferrer-i-Carbonell
In order to measure the monetary impact of informal care, the researchers first estimated the effect of providing informal care and of income on an individual’s subjective well-being, measured by means of a self-reported subjective happiness question. The data was gathered from 865 informal caregivers from 59 regional centers in the Netherlands.
Then the researchers estimated the income necessary to maintain the same level of informal caregiver’s well-being after providing an additional hour of informal care. This was accomplished by econometrically estimating the effect of hours of provided care and of income on individual’s well-being, while controlling for other individual characteristics.
Results revealed that the monetary value of informal care is approximately the market price for professional home care: 7–10 Euro/hour versus 8.53 Euro/hour. Additionally, Professor Ferrer-i-Carbonell found a distinction between the monetary value of informal care for caregivers depending on whether or not the care recipient is family related to the caregiver. For every given hour of care, providing care to family members involved a larger loss of utility than providing care to non-family members. Because family-related caregivers provide, on average, many more hours of care a week than the other caregivers, and the monetary value of informal care decreases with the number of provided hours of care, when looking at the value of an extra hour of provided care the difference between the two groups is not statistically significant.