The price of pain and the value of suffering

Abstract

Estimating the financial value of pain informs issues as diverse as the market price of analgesics, the cost-effectiveness of clinical treatments, compensation for injury, and the response to public hazards. Such valuations are assumed to reflect a stable trade-off between relief of discomfort and money. Here, using an auction-based health-market experiment, we show that the price people pay for relief of pain is strongly determined by the local context of the market, that is, by recent intensities of pain or immediately disposable income (but not overall wealth). The absence of a stable valuation metric suggests that the dynamic behavior of health markets is not predictable from the static behavior of individuals. We conclude that the results follow the dynamics of habit-formation models of economic theory, and thus, this study provides the first scientific basis for this type of preference modeling.

Figures

Fig. 1

The experimental task: (a) the trial sequence and (b) grouping of pain levels. In each trial (a), participants first saw the financial endowment for that trial and then received a single exemplar of painful electric shock, of low, medium, or high intensity. (Participants were not informed, nor did they report, that the pain was always at one of only three discrete levels.) They then selected the maximum price they were prepared to pay to avoid 15 additional shocks. The maximum price they could offer was their full endowment, which was given on a strictly trial-by-trial basis (such that there was no sense that endowments could be “saved” or carried over to pay for later pain relief). The market price was set randomly between zero and the full endowment amount, and if this price was lower than the participant’s price offer, the 15 painful stimuli were omitted at the cost of the market price (and not the participant’s offer). Trials were grouped into low-medium, high-medium, and low-high blocks (b). We repeated each block twice, so there were six blocks and 60 trials in total. The order of pain levels within each block was randomized, as was the overall order of the blocks.

Fig. 2

Mean offered prices (error bars represent ±1 SEM) for avoiding the different levels of pain as a function of the pain context (a, b) and difference between the price offered to avoid medium pain in low-medium blocks and medium-high blocks as a function of trial within each block (c). Mean prices are shown separately for (a) participants given a 40-pence endowment on each trial and (b) participants given an 80-pence endowment on each trial. The graph in (c) plots results separately for the two endowment groups and also shows regression lines.

Fig. 3

Demand curves for pain relief derived from the trials following experienced (consumed) pain of a long duration (i.e., 15 shocks). These curves show the quantity of pain relief that can be expected to be sold at different prices; the demand was determined by the number of price offers within a given price range (below a given level), which showed how many sales would have occurred if the market price had been within this price range. The three panels show results for (a) low, (b) medium, and (c) high pain levels, and within each graph, results are shown separately for the two endowment amounts and two pain contexts.