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Equity weights for economic evaluation: An Australian Discrete Choice Experiment, CHERE Working Paper 2008/5

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  • Richard Norman

    ()
    (CHERE, University of Technology, Sydney)

  • Gisselle Gallego

    ()
    (CHERE, University of Technology, Sydney)

Abstract

Background: Economic evaluation of healthcare interventions and technologies using the quality-adjusted life year (or life year) usually values outcomes independently of who they accrue to. This is a simplifying assumption relating to the more complex societal preferences. While the premise of equal value has been criticised as being unreflective of societal views, no alternative has gained significant traction. Aims: To identify the trade-offs made by an Australian population between total gain in life expectancy, initial life expectancy, gender, income and smoking status, and then to generate equity weights for economic evaluation from these results. Method: A discrete choice experiment was used in an online panel. 241 respondents answered twelve binary choices, and the results were analysed using logistic regression. Equity weights were then generated using Hicksian compensating variation. Results: A typical individual was willing to discriminate based on smoking and income, but not on gender or initial life expectancy (although the last of these is considered within a narrow range of 55-75 years). However, there was considerable heterogeneity in respondents. Equity weights ranged from 0.673 for smokers with an above average income to 1.207 for non-smokers with a below average income. This result was sensitive to the point at which the marginal utility of time was estimated. Conclusion: Healthcare decision making, using an orthodox QALY model, does not capture the views of society, particularly with regard to smoking or income. We have presented an alternative approach, weighting outcomes dependent on the personal characteristics of the individual receiving them. The feasibility of including this finding in economic evaluation is as yet uncertain and has to be investigated further.

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Bibliographic Info

Paper provided by CHERE, University of Technology, Sydney in its series Working Papers with number 2008/5.

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Date of creation: Sep 2008
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Handle: RePEc:her:chewps:2008/5

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Keywords: Economic evaluation; discrete choice experiment;

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  1. Olsen, Jan Abel & Richardson, Jeff & Dolan, Paul & Menzel, Paul, 2003. "The moral relevance of personal characteristics in setting health care priorities," Social Science & Medicine, Elsevier, vol. 57(7), pages 1163-1172, October.
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  7. Lancsar, Emily & Louviere, Jordan & Flynn, Terry, 2007. "Several methods to investigate relative attribute impact in stated preference experiments," Social Science & Medicine, Elsevier, vol. 64(8), pages 1738-1753, April.
  8. Rosalie Viney & Elizabeth Savage, 2006. "Health care policy evaluation: empirical analysis of the restrictions implied by Quality Adjusted Life Years, CHERE Working Paper 2006/10," Working Papers 2006/10, CHERE, University of Technology, Sydney.
  9. J.M.C. Santos Silva, 2004. "Deriving welfare measures in discrete choice experiments: a comment to Lancsar and Savage (2)," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 913-918.
  10. Paul Dolan & Rebecca Shaw & Aki Tsuchiya & Alan Williams, 2005. "QALY maximisation and people's preferences: a methodological review of the literature," Health Economics, John Wiley & Sons, Ltd., vol. 14(2), pages 197-208.
  11. Nancy Devlin & David Parkin, 2004. "Does NICE have a cost-effectiveness threshold and what other factors influence its decisions? A binary choice analysis," Health Economics, John Wiley & Sons, Ltd., vol. 13(5), pages 437-452.
  12. Browning, Colette J. & Thomas, Shane A., 2001. "Community values and preferences in transplantation organ allocation decisions," Social Science & Medicine, Elsevier, vol. 52(6), pages 853-861, March.
  13. Tsuchiya, Aki & Dolan, Paul, 2007. "Do NHS clinicians and members of the public share the same views about reducing inequalities in health?," Social Science & Medicine, Elsevier, vol. 64(12), pages 2499-2503, June.
  14. Emily Lancsar & Elizabeth Savage, 2004. "Deriving welfare measures from discrete choice experiments: a response to Ryan and Santos Silva," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 919-924.
  15. Williams, Alan, 1996. "QALYs and ethics: A health economist's perspective," Social Science & Medicine, Elsevier, vol. 43(12), pages 1795-1804, December.
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