Peer effects in health valuation: the relation between rating of contemporaries’ health and own health

Arthur E. Attema, Werner B. F. Brouwer, Jose Luis Pinto Prades

Most health valuation studies assume that individuals' health valuations do not depend on social comparisons. However, there is some evidence that this assumption is not satisfied in practice. This paper tests whether self-rated health by means of a Visual Analogue Scale (VAS) is related to how one perceives the health of one's contemporaries, while accounting for one's health as classified by the EQ-5D classification system. In a large sample (n = 1500), representative of the general public, we use a VAS to rate respondents' own health and their assessment of their contemporaries' health. In addition, we directly ask them whether they perceive their health to be better, the same, or worse than their contemporaries, and we measure their own health according to the EQ-5D-5 L. We find a positive relationship between own health rating and contemporaries' health rating, after controlling for the respondents' own health as classified according to the EQ-5D. Furthermore, we observe a discrepancy between relative health vis-à-vis age peers as measured by an ordinal comparison and relative health as measured by a VAS. Finally, respondents, especially women, tended to overestimate the health of other people of their age. We provide evidence that people's own health rating is related to the perception of health of contemporaries. Our results indicate that knowledge about a respondent's perception of others' health is useful in explaining health state valuations.