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Discounting life‐years: whither time preference?

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  • Dorte Gyrd‐Hansen
  • Jes Søgaard

Abstract

If elicited time preferences are to be incorporated into economic evaluations, not only social but also individual preferences may be included. The view of this paper is that social intertemporal preferences should govern social intertemporal choices when prioritising between the saving of lives now or in the future. However, the present value of an individual's stream of future health benefits is a matter of private consumption and hence either individual time preferences or social interpersonal preferences could be applied when evaluating the value of extended life or improved quality of life. This paper shows that it is possible to incorporate both types of time preferences in an economic evaluation; using the individual time preference or the social interpersonal preference when discounting the remaining life expectancy and the social intertemporal time preference for discounting the health benefits from the time of the risk reduction to present time. Such a scenario could solve potential problems such as double discounting of QALYs, the paradox of intertemporal equity versus interpersonal equity, as well as include elements of quantity, risk and uncertainty which are otherwise ignored in evaluations of life‐saving therapies. © 1998 John Wiley & Sons, Ltd.

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  • Dorte Gyrd‐Hansen & Jes Søgaard, 1998. "Discounting life‐years: whither time preference?," Health Economics, John Wiley & Sons, Ltd., vol. 7(2), pages 121-127, March.
    • Handle: RePEc:wly:hlthec:v:7:y:1998:i:2:p:121-127
    DOI: 10.1002/(SICI)1099-1050(199803)7:2<121::AID-HEC318>3.0.CO;2-H
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    References listed on IDEAS

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    1. Michael Jones-Lee & Susan Chilton & Hugh Metcalf & Jytte Nielsen, 2015. "Valuing gains in life expectancy: Clarifying some ambiguities," Journal of Risk and Uncertainty, Springer, vol. 51(1), pages 1-21, August.
    2. Ebert, Jane E.J., 2010. "The surprisingly low motivational power of future rewards: Comparing conventional money-based measures of discounting with motivation-based measures," Organizational Behavior and Human Decision Processes, Elsevier, vol. 111(2), pages 71-92, March.
    3. Jane E. J. Ebert & Drazen Prelec, 2007. "The Fragility of Time: Time-Insensitivity and Valuation of the Near and Far Future," Management Science, INFORMS, vol. 53(9), pages 1423-1438, September.
    4. Dorte Gyrd‐Hansen & Ivar Sønbø Kristiansen, 2008. "Preferences for ‘life‐saving’ programmes: Small for all or gambling for the prize?," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 709-720, June.
    5. Tayob, Nabihah & Murray, Susan, 2016. "Nonparametric restricted mean analysis across multiple follow-up intervals," Statistics & Probability Letters, Elsevier, vol. 109(C), pages 152-158.
    6. Brouwer, Werner B. F. & Koopmanschap, Marc A., 2000. "On the economic foundations of CEA. Ladies and gentlemen, take your positions!," Journal of Health Economics, Elsevier, vol. 19(4), pages 439-459, July.
    7. Cairns, John & van der Pol, Marjon, 2000. "Valuing future private and social benefits: The discounted utility model versus hyperbolic discounting models," Journal of Economic Psychology, Elsevier, vol. 21(2), pages 191-205, April.

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