Economic implications of in vitro fertilization using willingness to pay

Abstract

Fertility levels are determined by social, religious, and cultural factors on one hand, and by financial considerations that affect the demand for children as well as the supply of children on the other. Using theoretical and empirical models we examine the private and social benefit of children, and the private and social welfare differences that are generated by technological innovation in fertility technology. A theoretical model measures the marginal private and social benefit when the children’s potential output depends on the natural potential fertility combined with medical fertility technology. It is followed by an empirical model that focuses on the evaluation of the general public’s, and in vitro fertilization patients’ “willingness to pay” for fertility treatments. The economic evaluation method is based on willingness to pay, which is derived from answers to hypothetical questions. Based on questionnaires distributed between in vitro fertilization actual patients and the general public, the empirical model’s findings are that the average willingness to pay amongst patients is $5,482, whereas for the general public it is $4,398. Both the general public as well the actual patients are willing to pay more than the actual average cost of an in vitro fertilization treatment, which is $3,257. We find that when considering the appropriate allocation of limited resources, subsidizing fertilization should receive high priority since the net benefits for both patients and society are high.