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.
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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
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