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A QALY loss is a QALY loss is a QALY loss: a note on independence of loss aversion from health states

Author

Listed:
  • Stefan A. Lipman

    (Erasmus University)

  • Werner B. F. Brouwer

    (Erasmus University)

  • Arthur E. Attema

    (Erasmus University)

Abstract

Evidence has accumulated documenting loss aversion for monetary and, recently, for health outcomes—meaning that, generally, losses carry more weight than equally sized gains. In the conventional Quality-Adjusted Life Year (QALY) models, which comprise utility for quality and length of life, loss aversion is not taken into account. When measuring elements of the QALY model, commonly, the (implicit) assumption is that utility for length and quality of life are independent. First attempts to quantify loss aversion for QALYs typically measured loss aversion in the context of life duration, keeping quality of life constant (or vice versa). However, given that QALYs are multi-attribute utilities, it may be possible that the degree of loss aversion is dependent on, or inseparable from, quality of life and non-constant. We test this assumption using non-parametric methodology to quantify loss aversion, under different levels of quality of life. We measure utility of life duration for four health states within subjects, and present the results of a robustness test of loss aversion within the QALY model. We find loss aversion coefficients to be stable at the aggregate level, albeit with considerable heterogeneity at the individual level. Implications for applied work on prospect theory within health economics are discussed.

Suggested Citation

  • Stefan A. Lipman & Werner B. F. Brouwer & Arthur E. Attema, 2019. "A QALY loss is a QALY loss is a QALY loss: a note on independence of loss aversion from health states," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(3), pages 419-426, April.
  • Handle: RePEc:spr:eujhec:v:20:y:2019:i:3:d:10.1007_s10198-018-1008-9
    DOI: 10.1007/s10198-018-1008-9
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    References listed on IDEAS

    as
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Thesis Thursday: Stefan Lipman
      by Chris Sampson in The Academic Health Economists' Blog on 2021-01-21 07:00:04

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    More about this item

    Keywords

    Loss aversion; Prospect theory; QALY; Utility of life duration; Quality of life; Robustness;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • I10 - Health, Education, and Welfare - - Health - - - General

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