Valuing Informal Care for Economic Evaluation

Informal care is the mainstay of support for many people living in the community, particularly those with long-term care needs. It refers to the care provided to individuals who would have difficulties managing without this help, by family or friends who are unpaid, although they may receive some nominal payment or state benefits. Some definitions also add that informal carers spend a significant proportion of their life providing care and support, however, if the amount of time spent caring is an important consideration, this requires specification. Informal care tasks include providing a range of care and assistance with activities of daily living, such as support with mobility, social support, personal care, and domestic assistance. In low-income settings, carers might even provide support with a broader range of medical-related tasks which could involve health-related care, particularly where state funding of health care is highly limited.

The size of the informal care economy, while substantial, is challenging to quantify and value. On an average one in nine people aged 50 years or more reported providing care for a dependent relative across all Organization for Economic Co-operation and Development (OECD) countries in 2007. The World Health Organization predicts that during the next 40 years the dependency ratio in China and India, in particular, will increase greatly. There is also a concern that young carers do not get adequate support. Substantial differences in informal care can be seen across OECD countries and, in part, this reflects the input of informal care versus formal, paid long-term care. For example, the level of informal care is twofold larger in Italy and Spain as compared to Sweden where care provision is more formalized. In economic terms, informal care can be described as a quasi-market commodity as there is no explicit market where informal care is bought and sold, and it does not have a directly observable value, such as a price, to reflect either the resources required to provide care-related tasks, or the benefits of doing so.

Informal care does not have an explicit value; however, this does not imply that it is a free resource. From an economic perspective, there are two key considerations relating to the carer when considering the value of informal care: (1) people offering informal care face an opportunity cost in that time spent on caring replaces other activities, such as education, employment, and leisure, and (2) there is an opportunity cost of using informal care as, while generating some potential benefits, such as the utility gained from caring for a loved one, being an informal carer is also associated with burden and disutility, such as reduced quality of life and negative health impacts. It is worth noting too that carer and care recipient’s values are interdependent but this article focuses solely on the value of informal care in relation to the carer.

Informal care is rarely valued for inclusion in economic evaluation studies. Economic evaluation is increasingly used to inform national policy decisions about the efficient allocation of public funds across the economy. It offers a transparent framework to assess the relative costs and benefits of comparator interventions and has been applied in a range of sectors including the environment, health, and care. Many countries have developed detailed methods guidance for the economic evaluation of health-care interventions and now more attention is being given to the development of methods for the economic evaluation of care interventions. For example, from 1 Apr 2013 the remit for the National Institute for Health and Clinical Excellence in the UK is extending beyond health care to provide evidence-based guidance on social care interventions. Such guidance requires a systematic approach to measuring and valuing costs and benefits, consistent with the perspective chosen and considerably more research is required to identify the best approach to dealing with informal care in economic evaluations.

Valuing informal care for economic evaluation might be important in the following three respects: (1) for evaluating the cost-effectiveness of interventions or technologies to directly support informal carers (and care recipients), such as carers breaks or use of technologies such as robotic devices for house cleaning, (2) to assess interventions in which there is an indirect impact on informal carers, such as health-related packages of care in which informal carers contribute, for example, use of medication for Alzheimer’s disease, in which a carer is involved in administering the medication, or (3) for use in testing and redesigning services to evaluate the cost-effectiveness of different levels of access to more formal input, for example, from universal access to means-tested access. Once informal carer input is valued, their contribution is accounted for in an economic evaluation for use in informing the decision maker. In a scenario in which a new health-care intervention reduces health-care costs and increases use of informal care, relative to the comparator intervention, an analysis omitting this might result in a potentially undesirable shift of resource use from the health-care sector to the informal economy.

A broad range of methods have been developed to value informal care for economic evaluation but to date no formal guidance is available. This article reviews the methods for valuing informal care, including the methods used to measure time spent on informal care and the monetary valuation of this time, as well as nonmonetary methods and offers a brief review of the advantages and issues associated with applying currently available methods. The entry concludes by considering the implications of valuing informal care for economic evaluation. The same approach is used to review monetary and nonmonetary methods (see Figure 1). Four key steps comprise: (1) conceptualization of informal care, (2) identification of the caring activities or description of the effects of informal care, (3) measurement of the time spent on informal care (monetary) or the effects of informal care (nonmonetary), and (4) valuation of the time spent caring or the effects of informal care. This article focuses on the measurement and valuation, steps (3) and (4).

Valuing Informal Care Figure 1

 Monetary Valuation Of Informal Care

Informal care can be incorporated within an economic evaluation on the cost side of the analysis. Figure 2 summarizes the methods involved in monetarily valuing informal care based on the four above-mentioned steps. Obtaining a clear and consistent definition of what constitutes informal care is far from straightforward. The majority of informal care is provided by one or more individuals known to the care recipient, such as their family, however informal care might be offered by individuals who are friends or who befriend them. As van den Berg et al. (2004) have discussed, this raises issues about the nature of the interaction between the care recipient and the carer. Activities such as cooking and cleaning ordinarily might be provided by a spouse when neither partner requires care. Typically, only those activities that take place because the care recipient requires care, owing to, for example, deteriorating health, should be included as informal care. These can be less than straightforward to identify, particularly when caring has taken place over a long time horizon and, additionally, life styles vary across different healthy couples. There may be shared benefits or some joint production involved in the carer undertaking tasks which complicates the ability to distinguish the component that is categorized as informal care. For example, the carer may provide informal care while participating in a leisure pursuit with the care recipient. Another consideration is the multiple tasks that carers might undertake. Some activities might be health related, such as supporting the care recipient with mobility and may substitute the need for health-care assistant input, whereas other aspects of care such as personal care and support with administrative tasks or keeping the care recipient company are more likely to impact beyond narrowly defined health. The impact of the caring task on the informal carer might be affected by the intensity and duration of the care provided. All these issues need to be specified upfront so that assumptions underlying the analysis are transparent. To aid comparability across economic evaluations and across settings, a systematic approach is required to conceptualizing, identifying, measuring, and valuing informal care.

Valuing Informal Care Figure 2

Measuring Informal Care

Once tasks are identified as informal care, a method is required to measure time spent on informal care and four methods are reviewed next.

Time Diary Method

Respondents are asked to report the sequence of activities undertaken as defined by the analyst and the amount of time spent on each activity over a set period of time, such as every quarter of an hour. An example of use of the diary method developed to measure informal care time is found in van den Berg and Spauwen (2006). Advantages include systematic collection of data within a brief space of time of the activities occurring, thus minimizing the recall period. In addition, respondents can indicate whether they are undertaking more than one care-related activity at the same time and, in principle, this allows the analyst to correct for joint production. There is, however, no generally agreed method to do this and in practice there is often no correction for joint production. Disadvantages of the method include that it can be very time-consuming to complete the diary and this can put carers off participating in such studies and completing the diary can impact on the time spent caring. In principle, this method might be thought to be the most accurate, but it has problems with compliance.

Recall Method (Also Known As The Stylized Or Questionnaire Method)

This is probably the most commonly used method of time measurement. It involves asking respondents to report the amount of time spent on a particular activity and the frequency of the activity over a set period of time in the past. Examples of its use include the Carer Activity Survey by Davis et al. (1997), and the recall questionnaire used by van den Berg and Spauwen (2006). On other occasions, the recall method only asks about the amount of time spent on providing informal care even without referring to any care task. Compared to the time diary method, the recall method is less time-consuming to complete. Disadvantages, however, include that it is more sensitive to recall bias including systematic error because of differences in the accuracy of reporting past events by respondents. Although this method might be less accurate than the diary method, this consideration needs to be weighed against potentially greater compliance as carers seem able and more willing to use this method.

Experience Sampling Method (Also Known As Beeper Or Buzzer Method)

This has been used in time use and in wellbeing research, but to date, to the best of knowledge available, this approach has not been applied to measure informal care time. The method prompts respondents to register their activity at random instants over a prespecified time using a signal emitted from an electronic device. As the device beeps, respondents record the activities they are undertaking at that point in time. Gershuny (2011) found that on average this method provides highly accurate weighted sample estimates of time use across the sample. Experience sampling is less prone to recall bias than the time diary method because of immediate recording of the activity. If the respondent records their own responses rather than being given a closed-ended questionnaire, this method is likely to record all activity taking place. Disadvantages include respondent burden. A beeper system can intrude in daily life and might result in failure to respond. The method does not record the duration of the activities, nor are activities recorded sequentially, so there is a lack of context to the activity.

Direct Observation Method (Also Known As The Continuous Observation Or Outsider Method)

This method involves observers recording activities and as such might be considered objective, rather than relying on self-report, and therefore it is considered to be highly accurate. However, it is very time- and resource-consuming and can also be very intrusive.

Valuing Informal Care In Monetary Terms

Once the time spent on informal care is measured, a method is required to attach a monetary value to informal care time. Examples of studies valuing informal care in monetary terms are provided in Table 1 and this shows that the monetary values derived vary considerably by method and by caring task. There are two broad economic approaches for valuing time of using revealed preferences or stated preferences, as described next.

Valuing Informal Care Table 1

Revealed Preference

These preferences are obtained by analyzing individuals’ behavior or indirectly via preferences revealed in other markets such as from datasets recording individuals’ decisions about services which are close substitutes for activities undertaken by informal carers. Typically, revealed preference methods use wages or income data to derive monetary values. Note that both the opportunity cost and proxy good methods do not incorporate the full impact of informal care on carers. However, whether the full impact should be included in the analysis will depend on the decision problem and the perspective taken.

Opportunity Cost Method

This method values informal care as the income forgone by the carer when spending time on informal care. There are many examples of how the opportunity cost method has been used to value informal care time, for example, in van den Berg et al. (2006). Income forgone is the carer’s current wage rate (if employed) or can be estimated based on the previous wage rate if the carer worked in the past. The average (or median) net wage of people employed in the labor market who have the same sociodemographics might be used for those who have never worked. Use of this method is less straightforward for children and younger people as time spent on informal care may reduce the time available for education, which can have consequences later in life. Therefore, this method can result in different values for informal care, for example, a person with the potential of higher wages (e.g., a skilled professional) will have higher income forgone and the value attached to an hour of informal care will be higher for this person than for a person with the potential to earn a lower wage. Another issue is how to account for informal care activities that replace leisure time or unpaid work. Applying the wage rate of paid work to leisure time assumes that the wage rate reflects the marginal value of the time across the different uses of time. Another issue relates to the implications of using net or gross wage rates. The wage rate net of tax reflects the opportunity cost to the carer, whereas the gross rate reflects the opportunity cost to society. The choice of wage rate needs to be consistent with the perspective chosen for the analysis.

Proxy Good Method

Also known as replacement cost method, proxy good method values informal care time use at the price of a close substitute. The relevant substitute depends on the activities undertaken, for example, a health-care assistant wage could be used to value informal care time spent on help with feeding and the wage of a housekeeper for help with cleaning the house or doing the laundry. To use this approach the analyst requires data on caring activities undertaken, time spent on these activities and proxy values for each activity. This method assumes exact substitutability between formal and informal care, including assuming that the informal carer and care recipient are indifferent or have the same preferences for informal care as compared to formal care. The method implicitly assumes that any prices used are appropriate reflections of value.

Wellbeing Valuation Method

This method estimates the monetary value of providing informal care. It does so by estimating the carer’s wellbeing as a function of income and time spent caring, among other things. This allows the analyst to estimate the income required to compensate the carer for the loss in wellbeing because of providing informal care. The wellbeing valuation method uses data directly obtained from carers. The first application of this approach to valuing informal care time was undertaken by van Den Berg and Ferrer-i-Carbonell (2007). An assumption underlying the wellbeing valuation method is that wellbeing can be measured empirically and some analysts even assume that this measurable wellbeing is a proxy for utility, more specifically for experienced utility. An empirical finding is that providing informal care is associated with wellbeing losses as well as a positive association between income and wellbeing. In cases in which informal care would not be negatively correlated with wellbeing, it would not be possible to calculate the related monetary compensation and in case of a positive empirical association between informal care and wellbeing one could argue that the informal carer would be willing to pay to provide the care themselves: In other words, they may have a strong preference to provide the care and may benefit from caring. Although the authors are not aware of any published study that has found this positive association, the information obtained using this method might still be included in an economic evaluation.

Stated Preference

Stated preferences are obtained directly from respondents by asking them to consider hypothetical situations, typically using survey methods. The method relies on statements of preference, and not on actual choices and, hence, may not reflect the respondent’s actual behavior and are, therefore, criticized by mainstream economists.

Contingent Valuation

Contingent valuation values informal care either in terms of the maximum monetary amount informal carers would be willing to pay for reducing caring activities, or the minimum monetary amount that they would be willing to accept for supplying extra informal care. Contingent valuation has been used to estimate the value of informal care in a few studies, for example, Gustavsson et al. (2010) estimated the willingness to pay for reductions in informal care need in Alzheimer’s disease. Although contingent valuation questions might be relatively simple to ask, they might not be straightforward to answer as carers might not be used to thinking about monetary valuation of informal care time and, therefore, some respondents may be unwilling to value carer time in monetary terms. This might be especially true if the question is framed as if the care recipient might pay the carer. In an attempt to solving this problem van den Berg et al. (2005) suggested framing the question as if the government was going to compensate the carers, as sometimes happens via carer allowances for example. There is a substantial literature on biases involved in applying this method especially as willingness to accept values tend to be larger than willingness to pay ones and this difference cannot be explained based on economic theory. When van den Berg et al. (2005) explored this issue in relation to informal care in the Netherlands, the differences were quite small suggesting this bias is less persistent when applying the method to value informal care. It might be necessary to explore this further and to consider whether responses might be influenced by culture and the health and care system of the respondents participating in the study.

Discrete Choice Experiment (Although Strictly Speaking Based On Different Theories Also Known As Conjoint Measurement Or Conjoint Analysis)

Discrete choice experiment uses survey methods to obtain respondents’ estimation of the relative value of different attributes of a service which might include health, nonhealth, and process attributes. In addition, if a cost or a price is included as an attribute, a monetary value of the other attributes can be derived. Mentzakis et al. (2011), for example, included an attribute of the amount of money (d0, d4, d10, and d17) a respondent would receive as compensation per hour for the informal care they provided and in answering this, respondents were asked to consider the effect of the caring role on their own health and wellbeing. The methodology assumes that a service can be described by its constituent characteristics and that the total utility, satisfaction, or preference that a respondent derives from a service is determined by the utility they gain from each of the constituent parts. Examples using this method applied to informal care, have, to date, mainly included care tasks and care time and although this method in theory can also take into account the full impact or value of undertaking informal care on the carer themselves, including for instance involved health losses, this has not been contested in empirical applications so far.

Nonmonetary Valuation Of Informal Care

Informal care can also be incorporated in the effect side of an economic evaluation, rather than on the cost side. As for monetary valuation of informal care, there are four key steps (see Figure 3): (1) conceptualize informal care, in a similar way as described in Section Monetary Valuation of Informal Care, (2) describe the effect on the informal carer, (3) measure the effect on informal care, and (4) attach a nonmonetary valuation to the effect. This section focuses solely on the impact on carers, however, as noted earlier, there is likely to be considerable interdependence between the outcomes for the carer and the care recipient.

Valuing Informal Care Figure 3

Methods to incorporate informal care as an effect comprise three key measures: Burden, health, and health-related quality of life and informal care-related quality of life and some examples of these are provided in Table 2. In practice there may be some overlap between these measures.

Valuing Informal Care Table 2

Table 3 compares the dimensions included in three measures of care-related quality of life, the Carer Quality of Life Instrument (CQLI), the care-related quality of life (CarerQoL), and the Carer Experience Scale. As can be seen from the table, not all measures include the same dimensions, for example, CQLI and CarerQoL include physical health and energy, whereas the Carer Experience Scale does not. As different dimensions are incorporated across the three instruments, this limits their direct comparability and this complicates synthesis of effects across the instruments. An additional consideration is to what extent each measure incorporates the full effect on informal carers.

Valuing Informal Care Table 3

Measuring The Effects Of Informal Care

Burden Of Informal Care

Carer burden is one of the most commonly used indicators of informal care. It is an attempt to quantify the physical, psychological, social, and financial impacts of caring. Sometimes a distinction is made between objective and subjective burden with objective burden referring to observable aspects of informal care, such as the events and activities, with subjective burden referring to the perception of the caring experience by the carer, including feelings, attitudes, and emotions. Both concepts of burden are complementary as the time spent on caring and the activities involved (objective burden) also involve the perception of the burden of care by carers (subjective burden). Several instruments are available to measure burden as, for example, reviewed by Deeken et al. (2003). This heterogeneity adds to the complexity of cross-study comparisons and makes synthesis of results across studies difficult. Although the concept of burden traditionally focuses on the negative aspects of caring and places less obvious emphasis on the benefits or utility obtained by the care from caring, there have been attempts within the burden literature to incorporate benefits and the Caregiver Reaction Assessment is an example of such a measure.

Informal Carer’s Health-Related Quality Of Life

Measures of health-related quality of life have been used to account for the consequences of informal care on carers. Caring may impact positively and negatively on carers’ health-related quality of life. Instruments for use in measuring health-related quality of life include the SF-36 and the EQ-5D. Using health-related quality of life instruments to incorporate the impact of informal care on carers has been criticized because it may not capture the full effects on quality of life and wellbeing. However, the use of generic health-related quality of life instruments is helpful for comparing results across economic evaluations, including across disease areas.

Informal Caregiver Quality Of Life

As discussed by Stull et al. (1994), this concept is broader than health extending to incorporate all the factors that may impact on the carer’s life. Three examples of such instruments are reviewed briefly here including the caregiver quality of life instrument, the care-related quality of life instrument and the Carer Experience Scale.

The Caregiver Quality Of Life Instrument

This was the first carer-specific instrument developed to value carers’ wellbeing states. Mohide et al. (1988) report the CQLI as comprising five dimensions which were identified from a review of the literature and clinical opinion. The dimensions comprise two social (amount of time to socialize with family and friends and quality of the interpersonal friendship between the carer and the care recipient), two physical (adequacy of amount of sleep and degree of physical wellness and energy), and one emotional (degree of happiness and freedom from anxiety and frustration). Each dimension is described using one of four levels, comprising almost always, most of the time, half of the time, rarely, or almost never. Four standardized hypothetical health states are included, that is, the ideal caregiver quality of life reference state where the caregiver was almost always well on each of the dimensions, mild, moderate, and severe caregiver wellbeing states. Twenty-nine family caregivers and ten relatives of well older people describe their state of wellbeing, relative to the standardized states, over the preceding fortnight.

The Care-Related Quality Of Life Instrument

CarerQoL was developed to incorporate the impact of informal care on carer’s quality of life for use in an economic evaluation. Brouwer et al. (2006) presented the conceptualization and first test of the CarerQoL instrument. The CarerQoL-7D questionnaire measures how satisfied the carer is with their care-giving situation. The CarerQoL-7D contains seven dimensions comprising fulfillment, relational, mental, social, financial, support, and physical and each dimension is judged on one of three levels; some, a lot of. The dimensions were identified by selecting those most frequently assessed in several carer burden scales. To the authors’ knowledge, the CarerQoL instrument has not been applied in an economic evaluation in practice.

The Carer Experience Scale

This scale also values the carer experience for possible use in an economic evaluation. Developed by Al-Janabi et al. (2008), it has six dimensions comprising the carer-recipient relationship, institutional support, informal support, activities outside caring, control, and duty. Each dimension is described on one of three levels, that is most, some, or sometimes, few, little, or rarely. The dimensions were identified through a metaethnography of qualitative research in informal care together with interviews with carers.

Valuing The Effects Of Informal Care

Informal Carer’s Health-Related Quality Of Life

Published algorithms are available to convert health state descriptors from generic health-related quality of life instruments, such as the SF-12, SF-36, and the EQ-5D to HRQoL weights. Valuation tools include the visual analog scale (VAS), which strictly speaking does not generate a utility value, and the time trade-off (TTO) and standard gamble techniques which both incorporate choice, and standard gamble also includes uncertainty and for this reason tends to be the most favored valuation tool. However, VAS and TTO are considered easier to use and less cognitively burdensome.

It is worth noting that in undertaking informal care, caring may negatively impact on health-related quality of life but carers may also have health problems themselves: The causality of undertaking care and having poor health-related quality of life is unclear and this presents a challenge to analysts who aim to separate these issues. If providing care causes health-related quality of life loss and if carers are happy to take the loss, that is, the utility function of the carer might be interdependent with that of the care recipient’s: A key challenge is how to value this preferred health loss. Further consideration is required on the role of interdependent utility functions in economic evaluations, particularly if the local context has an influence.

Informal Caregiver Quality Of Life

The Carer Quality Of Life Instrument

CQLI uses the TTO to value states by indicating the number of years of future life in the ‘burdened’ test state they would exchange for a year in the ‘ideal’ reference state. The ‘ideal’ reference state refers to the best wellbeing state, in which carers almost always feel physically well and energetic, almost always feel happy and free from worry or frustration, almost always have sufficient to socialize with family and friends, almost every night get an adequate amount of undisturbed sleep, and almost always gets along well with the person being cared for. Drummond et al. (1991) used the CQLI in an economic evaluation comparing a support program for carers of elderly people with dementia with usual care. Quality-adjusted life-years (QALYs) with and without the support program were calculated using the CQLI values to inform the wellbeing experienced by the carers.

It should be noted that this is not the same as standard QALYs which are solely health-related.

The Care-Related Quality Of Life

CarerQoL includes a VAS to quantify how happy the carer feels currently on a scale of 0 (completely unhappy) to 10 (completely happy).

The Carer Experience Scale

This scale was valued using best-worst scaling in an orthogonal main effects design. In best-worst scaling, respondents compare statements within a profile and select the most and the least desirable statement. The best state, i.e., that with the lowest burden, has the value of 0 (zero), whereas the worst state, i.e., that with the worst burden and which every dimension has the worst level, was set to 100. Each dimension has different values and together these descriptors define the health state. For example, the health state with dimensions at the middle level has the value of 64.58. This provides a cardinal scale, however, there is no means of combining it with length of life to generate QALYs.

Discussion

This section offers an overview of methods to value informal care in monetary or nonmonetary terms. The choice of method depends on the research question, the data available, and the type of research being undertaken. This section has focused on the application of these methods describing their use in practice and has not discussed the normative foundations underpinning different approaches. However, in undertaking an economic evaluation, assuming a decision is taken to value informal care, a key issue is how to combine the method chosen with other methods used in economic evaluation and to ensure no doublecounting. If monetary valuation is chosen, as a consequence of which the values are included on the cost side of an economic evaluation, then it could be combined with the cost of other inputs. A challenge for monetary valuation methods is that the values obtained are dependent on the individual’s income, as greater ability to pay will drive up their willingness to pay for a service and possibly willingness to accept to provide informal care. Valuing informal care in terms of the effects of health-related quality of life raises the question on how to aggregate the values with care recipient’s health-related quality of life, and it is not clear how to incorporate this formally into economic evaluation. It has been suggested that multicriteria decision analysis could be used to get around this issue, although this approach is not without its detractors.

Stronger guidance for analysts on whether and how to value informal care would result in greater uniformity in valuing informal care within studies and this would enhance the transferability and comparability of economic evaluations. Before this, more conceptual work needs to be undertaken to examine how to identify, measure, and value informal care. Informal carers provide a vital service within the community and this review illustrates that there are many methods available to quantify the economic value of this essential service.

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Value of Information Methods to Prioritize Research