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The economic evaluation of health programmes: why discount health consequences more than monetary consequences?

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  • Angelina Lazaro
  • Ramon Barberan
  • Encarnacion Rubio

Abstract

There is currently general agreement amongst economists that the discount rate to compute the present value of benefits and costs in the economic evaluation of public policies is defined according to the social time preference approach. However, whether this rate has to be used for the discount of non-monetary health consequences is a question for which there is no satisfactory reply. In this paper, it is argued that such a reply rests on the estimation of the relationship between the individual time preference for health and money in the contexts of private and social choice. In support of this argument an empirical analysis has been carried out in which the individuals making-up a representative sample of the population of Zaragoza (Spain) have been faced with a series of hypothetical inter-temporal choices. Their replies have implicitly revealed their temporal preference rates and have led to the conclusion that health consequences are discounted at a higher rate than monetary consequences. This would appear to be contrary to the standard practice applied in the economic valuation of health programmes.

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  • Angelina Lazaro & Ramon Barberan & Encarnacion Rubio, 2002. "The economic evaluation of health programmes: why discount health consequences more than monetary consequences?," Applied Economics, Taylor & Francis Journals, vol. 34(3), pages 339-350.
  • Handle: RePEc:taf:applec:v:34:y:2002:i:3:p:339-350
    DOI: 10.1080/00036840110043758
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    Cited by:

    1. Lydia Lawless & Andreas Drichoutis & Rodolfo Nayga, 2013. "Time preferences and health behaviour: a review," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 1(1), pages 1-19, December.
    2. Lazaro, Angelina & Barberan, Ramon & Rubio, Encarnacion, 2002. "The discounted utility model and social preferences:: Some alternative formulations to conventional discounting," Journal of Economic Psychology, Elsevier, vol. 23(3), pages 317-337, June.
    3. Robberstad, Bjarne, 2005. "Estimation of private and social time preferences for health in northern Tanzania," Social Science & Medicine, Elsevier, vol. 61(7), pages 1597-1607, October.
    4. Marjon Pol & Larissa Roux, 2005. "Time preference bias in time trade-off," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 6(2), pages 107-111, June.

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