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In this paper, we outline what we believeare the main possible approaches to estimatinghealth state dependence. We distinguishtwo broad classes of empirical approaches:approaches based on individuals’ revealeddemand for moving resources across healthstates, and approaches based on observed utilitychanges associated with health changes forindividuals of different consumption or resourcelevels. We discuss the appeals and challenges ofeach, in turn. Our basic conclusion is that whilenone of these approaches is a panacea, manyoffer the potential to shed important insights onthe nature of health state dependence.U.S. Social Security Administration (grant #10-P-98363-1-05

Approaches to Estimating the Health State Dependence of the Utility Function