Economic valuation of health risk exposure of restaurant users in Dhaka city

Abstract

The aim of the study presented in this paper is to estimate the economic cost of health risk exposure of the restaurant users in Dhaka city. In a large-scale survey, 400 restaurant users in Dhaka city belonging to lower-middle to high income group were asked for their preferences for a hypothetical ‘Food Safety Inspection Programme’ using closed ended dichotomous choice contingent valuation questions. The study reveals an average estimated willingness to pay of Tk31 (US$ 0.5) which is 13% of the average restaurant bill per visit per person. Aggregating the overall willingness to pay estimate across the whole population, a reduction in restaurant food-related health risk results in a total economic benefit of Tk2,250 million (US$33million) per year. The study, furthermore, reveals that the respondent' willingness to pay for the Inspection Programme varies with the degree of health risk exposure, respondent' income level, frequency of restaurant visits, the disutility from health risks and the levels of self-protection. Two different health risk indicators, subjective (respondent perceived probability of becoming ill after eating in a restaurant) and objective (experience of negative health incidences from low quality restaurant food), have been used to test the consistency of influence of health risk exposure on stated willingness to pay. Better model fit has been observed with the objective health risk exposure. The results from the statistical models indicate that the offered bid amounts (additional amount of money that the restaurant users need to pay in order to finance the Inspection Programme) affects willingness to pay negatively. We find income, frequency of restaurant visits and health consciousness influencing willingness to pay for the Inspection Programme positively. Finally, our results confirm the hypothesis that willingness to pay for health risk reduction varies positively with the levels of risk exposure independent of the type of indicators (subjective or objective) we use to measure health risk.

Keywords:

• health risk
• contingent valuation
• restaurant
• Dhaka city
• willingness to pay
• food safety

Acknowledgements

We are grateful to the students of North South University who carried out the face-to-face interviews in April 2006. We furthermore gratefully acknowledge the valuable advices from Dr. Roy Brouwer, Prof. A. K. Enamul Haque and Prof. Syed Saad Andaleeb. The findings, interpretations and conclusions expressed in this paper are entirely those of the authors and should not be attributed in any manner to the North South University Administration or the Board of Executive Directors.

Notes

1. The Daily Star, June 15, 2005.

2. Food safety refers to the conditions and practices that preserve the quality of food to prevent contamination and foodborne illnesses. (Definition used from medical encyclopedia.)

3. Centre is defined as places where business and economic activities are concentrated.

4. Differences are tested using the non-parametric Mann-Whitney test. The Z test statistic equals −3.566 (p < 0.001).

5. This is the most common and the simplest procedure of estimating average willingness to pay.

6. Information obtained from key informant interviews.