The Validity of QALYs Under Non-Expected Utility
AbstractThis paper examines applications of non-expected utility in the health domain. The most widely used utility model in health economics, the time-linear QALY model, assumes (i) separability of quality of life and life duration, and (ii) linearity of the utility for life duration. We perform new tests, which are robust to violations of expected utility, of these two assumptions. The data support separability, but show that the utility for life duration is concave rather than linear. The finding of concave utility may not be surprising in itself. The contribution of this paper is to demonstrate this empirically without being invalidated by violations of expected utility.
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.
Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 113.
Date of creation: Feb 2004
Date of revision:
Non-expected utility; QALYs; utility curvature; aggregation;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- 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.:
- G. Ardine De Wit & Jan J.V. Busschbach & Frank Th. De Charro, 2000. "Sensitivity and perspective in the valuation of health status: whose values count?," Health Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 109-126.
- Abdellaoui, Mohammed & Barrios, Carolina & Wakker, Peter P., 2007. "Reconciling introspective utility with revealed preference: Experimental arguments based on prospect theory," Journal of Econometrics, Elsevier, vol. 138(1), pages 356-378, May.
- Hammond, P.J. & , ., 1987. "Consequentialist foundations for expected utility," CORE Discussion Papers 1987016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Bleichrodt, Han & Quiggin, John, 1997. "Characterizing QALYs under a General Rank Dependent Utility Model," Journal of Risk and Uncertainty, Springer, vol. 15(2), pages 151-65, November.
- Philippe Delquié, 1997. ""Bi-Matching": A New Preference Assessment Method to Reduce Compatibility Effects," Management Science, INFORMS, vol. 43(5), pages 640-658, May.
- Wakker, Peter, 1993. "Additive representations on rank-ordered sets : II. The topological approach," Journal of Mathematical Economics, Elsevier, vol. 22(1), pages 1-26.
- Quiggin, John & Horowitz, John, 1995. "Time and Risk," Journal of Risk and Uncertainty, Springer, vol. 10(1), pages 37-55, January.
- Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
- Karni, Edi & Safra, Zvi, 1989. "Dynamic Consistency, Revelations in Auctions and the Structure of Preferences," Review of Economic Studies, Wiley Blackwell, vol. 56(3), pages 421-33, July.
- Cubitt, Robin P & Sugden, Robert, 1998. "The Selection of Preferences through Imitation," Review of Economic Studies, Wiley Blackwell, vol. 65(4), pages 761-71, 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.
- Bleichrodt, Han & Wakker, Peter & Johannesson, Magnus, 1997. "Characterizing QALYs by Risk Neutrality," Journal of Risk and Uncertainty, Springer, vol. 15(2), pages 107-14, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Guallar).
If references are entirely missing, you can add them using this form.