Reassurance, regret and uncertainty: testing ex ante sources of (dis)utility and the welfarist account of social welfare
AbstractThis paper considers an issue that has received little attention in the literature on health state evaluation: the relevance of the ex ante/ex post distinction in the assessment of quality of life. Ex post evaluations are based on experience of the health state being evaluated. Ex ante evaluations are made in anticipation of actually experiencing the health state, and are able to capture sources of pre-outcome (dis)utility such as anticipatory fear, anxiety, hope and dread. Which perspective should be used for economic evaluation? From the welfarist perspective it might be argued that ex ante evaluations should be used, because all sources of utility are relevant. From the extra-welfarist perspective it might argued that ex post evaluations should be used, because economic evaluation should be based solely on realised outcomes, at least in the context of a publicly financed health service. We sought the views of the Australian public on this issue. Using social willingness to pay questions, we asked respondents to select between alternative health services which either did, or did not, take pre-outcome sources of utility into account. Respondents were asked whether or not tax payers should pay a higher price for services that increased pre-outcome utility, and for which patients would be prepared to pay personally. They were also asked whether they would accept less spending on other health services for services that increased pre-outcome utility. The results indicated little support for welfarism. Of respondents, only 32.6 per cent would accept an increase in taxes for everyone to provide a service preferred by patients for its reassurance. Only 29.8 per cent would accept an increase in taxes to provide a service preferred by patients for its minimisation of potential for regret. Less decisively, 43.1 per cent would accept an increase in taxes to provide a service preferred by patients for its avoidance of uncertainty. On average, only 28.6 per cent of respondents would accept less spending on other health services to provide these services. The implications of these findings for economic evaluation studies are, first, that the Australian community does not believe that the purpose of its publicly financed health system should be to increase utility as defined by private willingness to pay and, second, that the gold standard for health-state measurement should elicit ex post evaluations from patients, not ex ante evaluations from the public.
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 Monash University, Centre for Health Economics in its series Centre for Health Economics Working Papers with number 153/05.
Length: 21 pages
Date of creation: Jan 2005
Date of revision:
Contact details of provider:
Postal: Centre for Health Economics, Monash University, Building 75, Clayton, Victoria 3800, Australia
Web page: http://www.buseco.monash.edu.au/centres/che/
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-12 (All new papers)
- NEP-CBE-2006-11-12 (Cognitive & Behavioural Economics)
- NEP-UPT-2006-11-12 (Utility Models & Prospect Theory)
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.:
- Adam Oliver, 2000. "Uncertainty aversion: a reply to the paper by Andersson and Lyttkens," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 253-255.
- Fredrik Andersson & Carl Hampus Lyttkens, 1999. "Preferences for equity in health behind a veil of ignorance," Health Economics, John Wiley & Sons, Ltd., vol. 8(5), pages 369-378.
- Loomes, Graham & Sugden, Robert, 1987. "Testing for Regret and Disappointment in Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 97(388a), pages 118-29, Supplemen.
- Peter P. Wakker, 2000. "Uncertainty aversion: a discussion of critical issues in health economics," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 261-263.
- Carmela Di Mauro & Anna Maffioletti, 2004. "Attitudes to risk and attitudes to uncertainty: experimental evidence," Applied Economics, Taylor and Francis Journals, vol. 36(4), pages 357-372.
- Smith, Richard David, 1996. "Is Regret Theory an alternative basis for estimating the value of healthcare interventions?," Health Policy, Elsevier, vol. 37(2), pages 105-115, August.
- Mossin, Jan, 1969. "A Note on Uncertainty and Preferences in a Temporal Context," American Economic Review, American Economic Association, vol. 59(1), pages 172-74, March.
- Ryan, Mandy, 1998. "Valuing psychological factors in the provision of assisted reproductive techniques using the economic instrument of willingness to pay," Journal of Economic Psychology, Elsevier, vol. 19(2), pages 179-204, April.
- G. Salkeld & M. Ryan & L. Short, 2000. "The veil of experience: do consumers prefer what they know best?," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 267-270.
- Loomes, Graham, 1988. "Further Evidence of the Impact of Regret and Disappointment in Choice under Uncertainty," Economica, London School of Economics and Political Science, vol. 55(217), pages 47-62, February.
- Peter Klibanoff, 2001. "Characterizing uncertainty aversion through preference for mixtures," Social Choice and Welfare, Springer, vol. 18(2), pages 289-301.
- Caplin, Andrew & Leahy, John, 1997.
"Psychological Expected Utility Theory and Anticipatory Feelings,"
97-37, C.V. Starr Center for Applied Economics, New York University.
- Andrew Caplin & John Leahy, 2001. "Psychological Expected Utility Theory And Anticipatory Feelings," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 55-79, February.
- Kreps, David M & Porteus, Evan L, 1978.
"Temporal Resolution of Uncertainty and Dynamic Choice Theory,"
Econometric Society, vol. 46(1), pages 185-200, January.
- David M Kreps & Evan L Porteus, 1978. "Temporal Resolution of Uncertainty and Dynamic Choice Theory," Levine's Working Paper Archive 625018000000000009, David K. Levine.
- Schoemaker, Paul J H, 1982. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 529-63, June.
- Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-84, September.
- Wagstaff, Adam, 1991. "QALYs and the equity-efficiency trade-off," Journal of Health Economics, Elsevier, vol. 10(1), pages 21-41, May.
- Spence, Michael & Zeckhauser, Richard J, 1972. "The Effect of the Timing of Consumption Decisions and the Resolution of Lotteries on the Choice of Lotteries," Econometrica, Econometric Society, vol. 40(2), pages 401-03, March.
- Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-24, December.
- Culyer, A J, 1989. "The Normative Economics of Health Care Finance and Provision," Oxford Review of Economic Policy, Oxford University Press, vol. 5(1), pages 34-58, Spring.
- George Wu, 1999. "Anxiety and Decision Making with Delayed Resolution of Uncertainty," Theory and Decision, Springer, vol. 46(2), pages 159-199, April.
- Epstein, Larry G, 1999. "A Definition of Uncertainty Aversion," Review of Economic Studies, Wiley Blackwell, vol. 66(3), pages 579-608, July.
- Alan Williams, 1997. "Intergenerational Equity: An Exploration of the 'Fair Innings' Argument," Health Economics, John Wiley & Sons, Ltd., vol. 6(2), pages 117-132.
- Fredrik Andersson & Carl Hampus Lyttkens, 2000. "Uncertainty aversion-a reply to Oliver," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 257-259.
- Ma, Chenghu, 2000. "Uncertainty aversion and rationality in games of perfect information," Journal of Economic Dynamics and Control, Elsevier, vol. 24(3), pages 451-482, March.
- Dreze, Jacques H. & Modigliani, Franco, 1972. "Consumption decisions under uncertainty," Journal of Economic Theory, Elsevier, vol. 5(3), pages 308-335, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Teresa Cheong).
If references are entirely missing, you can add them using this form.