A test of independence of discounting from quality of life
AbstractThe quality-adjusted life-years (QALY) model assumes quality and quantity of life can be multiplied into a single index and requires quality and quantity to be mutually independent, which need not hold empirically. This paper proposes a new test for measuring independence of utility of life duration from quality of life in a riskless setting. We use a large representative sample of Dutch citizens and include two health states generally considered better than dead (BTD) and one health state considered worse than dead (WTD). Independence cannot be rejected when comparing the BTD health states, but is rejected when comparing the BTD states with the WTD state. In particular, utility of life duration becomes more concave for the WTD state. This may suggest that independence holds only for BTD health states. This has implications for the QALY model and would require using sign-dependent utility of life duration functions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Health Economics.
Volume (Year): 31 (2012)
Issue (Month): 1 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505560
Discounting; QALY model; Utility of life duration;
Find related papers by JEL classification:
- D90 - Microeconomics - - Intertemporal Choice - - - General
- I10 - Health, Education, and Welfare - - Health - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
- Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
- Morone, Andrea & Schmidt, Ulrich, 2003.
"An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data,"
Diskussionspapiere der Wirtschaftswissenschaftlichen FakultÃ¤t der Leibniz UniversitÃ¤t Hannover
dp-280, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
- Andrea Morone & Ulrich Schmidt, 2008. "An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data," Economics Bulletin, AccessEcon, vol. 4(20), pages 1-12.
- Andrea Morone & Ulrich Schmidt, 2005. "An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data," Papers on Strategic Interaction 2005-28, Max Planck Institute of Economics, Strategic Interaction Group.
- Morone, Andrea & Schmidt, Ulrich, 2006. "An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data," Economics Working Papers 2006,08, Christian-Albrechts-University of Kiel, Department of Economics.
- Mohammed Abdellaoui & ArthurE. Attema & Han Bleichrodt, 2010. "Intertemporal Tradeoffs for Gains and Losses: An Experimental Measurement of Discounted Utility," Economic Journal, Royal Economic Society, vol. 120(545), pages 845-866, 06.
- Han Bleichrodt & José Luis Pinto & José María Abellán-Perpiñán, 2003.
"A consistency test of the time trade-off,"
Economics Working Papers
676, Department of Economics and Business, Universitat Pompeu Fabra.
- Han Bleichrodt & José Luis Pinto & José María Abellán-Perpiñán, 2003. "A consistency test of the time trade-off," Working Papers, Research Center on Health and Economics 676, Department of Economics and Business, Universitat Pompeu Fabra.
- Lisa R. Anderson & Jennifer M. Mellor, 2008.
"Are Risk Preferences Stable? Comparing an Experimental Measure with a Validated Survey-Based Measure,"
74, Department of Economics, College of William and Mary.
- Lisa Anderson & Jennifer Mellor, 2009. "Are risk preferences stable? Comparing an experimental measure with a validated survey-based measure," Journal of Risk and Uncertainty, Springer, vol. 39(2), pages 137-160, October.
- Dolan, Paul & Stalmeier, Peep, 2003. "The validity of time trade-off values in calculating QALYs: constant proportional time trade-off versus the proportional heuristic," Journal of Health Economics, Elsevier, vol. 22(3), pages 445-458, May.
- Bleichrodt, Han & Gafni, Amiram, 1996. "Time preference, the discounted utility model and health," Journal of Health Economics, Elsevier, vol. 15(1), pages 49-66, February.
- Khwaja, Ahmed & Silverman, Dan & Sloan, Frank, 2007.
"Time preference, time discounting, and smoking decisions,"
Journal of Health Economics,
Elsevier, vol. 26(5), pages 927-949, September.
- Ahmed Khwaja & Dan Silverman & Frank Sloan, 2006. "Time Preference, Time Discounting, and Smoking Decisions," NBER Working Papers 12615, National Bureau of Economic Research, Inc.
- Arie Kapteyn & Federica Teppa, 2003.
"Hypothetical Intertemporal Consumption Choices,"
Royal Economic Society, vol. 113(486), pages C140-C152, March.
- Kapteyn, Arie & Federica Teppa, 2002. "Hypothetical Intertemporal Consumption Choices," Royal Economic Society Annual Conference 2002 111, Royal Economic Society.
- Kapteyn, A. & Teppa, F., 2001. "Hypothetical Intertemporal Consumption Choices," Discussion Paper 2001-31, Tilburg University, Center for Economic Research.
- repec:ebl:ecbull:v:4:y:2008:i:20:p:1-12 is not listed on IDEAS
- Manzini, Paola & Mariotti, Marco & Mittone, Luigi, 2006.
"Choosing Monetary Sequences: Theory and Experimental Evidence,"
IZA Discussion Papers
2129, Institute for the Study of Labor (IZA).
- Paola Manzini & Marco Mariotti & Luigi Mittone, 2010. "Choosing monetary sequences: theory and experimental evidence," Theory and Decision, Springer, vol. 69(3), pages 327-354, September.
- Paola Manzini & Marco Mariotti & Luigi Mittone, 2006. "Choosing Monetary Sequences: Theory and Experimental Evidence," CEEL Working Papers 0601, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
- Brouwer, Werner B. F. & van Exel, N. Job A. & Stolk, Elly A., 2005. "Acceptability of less than perfect health states," Social Science & Medicine, Elsevier, vol. 60(2), pages 237-246, January.
- Aki Tsuchiya, 2000. "QALYs and ageism: philosophical theories and age weighting," Health Economics, John Wiley & Sons, Ltd., vol. 9(1), pages 57-68.
- John D Hey & Andrea Morone & Ulrich Schmidt, 2007.
"Noise and Bias in Eliciting Preferences,"
07/04, Department of Economics, University of York.
- Robin Cubitt & Chris Starmer & Robert Sugden, 1998. "On the Validity of the Random Lottery Incentive System," Experimental Economics, Springer, vol. 1(2), pages 115-131, September.
- Hall, Jane & Gerard, Karen & Salkeld, Glenn & Richardson, Jeff, 1992. "A cost utility analysis of mammography screening in Australia," Social Science & Medicine, Elsevier, vol. 34(9), pages 993-1004, May.
- Doctor, Jason N. & Bleichrodt, Han & Miyamoto, John & Temkin, Nancy R. & Dikmen, Sureyya, 2004. "A new and more robust test of QALYs," Journal of Health Economics, Elsevier, vol. 23(2), pages 353-367, March.
- Chapman, Gretchen B., 1996. "Expectations and Preferences for Sequences of Health and Money," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(1), pages 59-75, July.
- Tversky, Amos & Kahneman, Daniel, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1039-61, November.
- Morone, Andrea, 2010.
"On price data elicitation: A laboratory investigation,"
Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics),
Elsevier, vol. 39(5), pages 540-545, October.
- Morone, Andrea, 2009. "On Price Data Elicitation: a Laboratory Investigation," MPRA Paper 18358, University Library of Munich, Germany.
- Anne Spencer & Angela Robinson, 2007. "Tests of Utility Independence When Health Varies over Time," Working Papers 596, Queen Mary, University of London, School of Economics and Finance.
- Marjon Pol & Larissa Roux, 2005. "Time preference bias in time trade-off," The European Journal of Health Economics, Springer, vol. 6(2), pages 107-111, June.
- Lowenstein, George & Prelec, Drazen, 1991. "Negative Time Preference," American Economic Review, American Economic Association, vol. 81(2), pages 347-52, May.
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Bostic, Raphael & Herrnstein, R. J. & Luce, R. Duncan, 1990. "The effect on the preference-reversal phenomenon of using choice indifferences," Journal of Economic Behavior & Organization, Elsevier, vol. 13(2), pages 193-212, March.
- Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer, vol. 2(2), pages 107-127, December.
- Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
- Harrison, Glenn W., 1986. "An experimental test for risk aversion," Economics Letters, Elsevier, vol. 21(1), pages 7-11.
- Enrica Carbone & John D. Hey, 2004. "The effect of unemployment on consumption: an experimental analysis," Economic Journal, Royal Economic Society, vol. 114(497), pages 660-683, 07.
- J. Kirsch & A. McGuire, 2000. "Establishing health state valuations for disease specific states: an example from heart disease," Health Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 149-158.
- Spencer, Anne & Robinson, Angela, 2007. "Tests of utility independence when health varies over time," Journal of Health Economics, Elsevier, vol. 26(5), pages 1003-1013, September.
- Dolan, Paul, 2000. "The measurement of health-related quality of life for use in resource allocation decisions in health care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 32, pages 1723-1760 Elsevier.
- Stolk, Elly A. & Brouwer, Werner B. F. & Busschbach, Jan J. V., 2002. "Rationalising rationing: economic and other considerations in the debate about funding of Viagra," Health Policy, Elsevier, vol. 59(1), pages 53-63, January.
- Beattie, Jane & Loomes, Graham, 1997. "The Impact of Incentives upon Risky Choice Experiments," Journal of Risk and Uncertainty, Springer, vol. 14(2), pages 155-68, March.
- Peter Wakker & Daniel Deneffe, 1996. "Eliciting von Neumann-Morgenstern Utilities When Probabilities Are Distorted or Unknown," Management Science, INFORMS, vol. 42(8), pages 1131-1150, August.
- Attema, Arthur E. & Brouwer, Werner B.F., 2009. "The correction of TTO-scores for utility curvature using a risk-free utility elicitation method," Journal of Health Economics, Elsevier, vol. 28(1), pages 234-243, January.
- Mohammed Abdellaoui & Olivier L'Haridon & Corina Paraschiv, 2011. "Experienced vs. Described Uncertainty: Do We Need Two Prospect Theory Specifications?," Management Science, INFORMS, vol. 57(10), pages 1879-1895, October.
- Uri Benzion & Amnon Rapoport & Joseph Yagil, 1989. "Discount Rates Inferred from Decisions: An Experimental Study," Management Science, INFORMS, vol. 35(3), pages 270-284, March.
- Abellan-Perpiñan, Jose Maria & Bleichrodt, Han & Pinto-Prades, Jose Luis, 2009. "The predictive validity of prospect theory versus expected utility in health utility measurement," Journal of Health Economics, Elsevier, vol. 28(6), pages 1039-1047, December.
- Robinson, Angela & Dolan, Paul & Williams, Alan, 1997. "Valuing health status using VAS and TTO: What lies behind the numbers?," Social Science & Medicine, Elsevier, vol. 45(8), pages 1289-1297, October.
- L. M. Lamers & J. McDonnell & P. F. M. Stalmeier & P. F. M. Krabbe & J. J. V. Busschbach, 2006. "The Dutch tariff: results and arguments for an effective design for national EQ-5D valuation studies," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1121-1132.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.