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A Consistency Test of the Time Trade-Off

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Author Info
Han Bleichrodt
José Luis Pinto
José María Abellán-Perpiñán

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Abstract

This paper tests the internal consistency of time trade-off utilities. We find significant violations of consistency in the direction predicted by loss aversion. The violations disappear for higher gauge durations. We show that loss aversion can also explain that for short gauge durations time trade-off utilities exceed standard gamble utilities. Our results suggest that time trade-off measurements that use relatively short gauge durations, like the widely used EuroQol algorithm (Dolan 1997), are affected by loss aversion and lead to utilities that are too high.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 676.

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Date of creation: Mar 2003
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Handle: RePEc:upf:upfgen:676

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Related research
Keywords: Cost-Utility Analysis; Time Trade-Off; Loss Aversion;

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Find related papers by JEL classification:
I10 - Health, Education, and Welfare - - Health - - - General

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References listed on IDEAS
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.:
  1. Dolan, Paul & Jones-Lee, Michael, 1997. "The time trade-off: A note on the effect of lifetime reallocation of consumption and discounting," Journal of Health Economics, Elsevier, vol. 16(6), pages 731-739, December. [Downloadable!] (restricted)
  2. Dolan, P. & Gudex, C. & Kind, P. & Williams, A., 1996. "Valuing health states: A comparison of methods," Journal of Health Economics, Elsevier, vol. 15(2), pages 209-231, April. [Downloadable!] (restricted)
  3. Dolan, Paul, 2000. "The measurement of health-related quality of life for use in resource allocation decisions in health care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 32, pages 1723-1760 Elsevier. [Downloadable!] (restricted)
  4. Ortona, Guido & Scacciati, Francesco, 1992. "New experiments on the endowment effect," Journal of Economic Psychology, Elsevier, vol. 13(2), pages 277-296, June. [Downloadable!] (restricted)
  5. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March. [Downloadable!] (restricted)
  6. Bleichrodt, Han & Johannesson, Magnus, 1997. "Standard gamble, time trade-off and rating scale: Experimental results on the ranking properties of QALYs," Journal of Health Economics, Elsevier, vol. 16(2), pages 155-175, April. [Downloadable!] (restricted)
  7. Tversky, Amos & Kahneman, Daniel, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1039-61, November. [Downloadable!] (restricted)
  8. Dolan, Paul & Stalmeier, Peep, 2003. "The validity of time trade-off values in calculating QALYs: constant proportional time trade-off versus the proportional heuristic," Journal of Health Economics, Elsevier, vol. 22(3), pages 445-458, May. [Downloadable!] (restricted)
  9. Anne Spencer, 2003. "The TTO method and procedural invariance," Health Economics, John Wiley & Sons, Ltd., vol. 12(8), pages 655-668. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. 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. [Downloadable!]
  2. Arthur E. Attema & Werner B. F. Brouwer, 2008. "Can we fix it? Yes we can! But what? A new test of procedural invariance in TTO-measurement," Health Economics, John Wiley & Sons, Ltd., vol. 17(7), pages 877-885. [Downloadable!]
  3. José-María Abellán-Perpiñán & José-Luis Pinto-Prades & Ildefonso Méndez-Martínez & Xabier Badía-Llach, 2006. "Towards a better QALY model," Health Economics, John Wiley & Sons, Ltd., vol. 15(7), pages 665-676. [Downloadable!]
  4. Benjamin M. Craig, 2009. "The duration effect: a link between TTO and VAS values," Health Economics, John Wiley & Sons, Ltd., vol. 18(2), pages 217-225. [Downloadable!]
  5. Ken Buckingham & Nancy Devlin, 2006. "A theoretical framework for TTO valuations of health," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1149-1154. [Downloadable!]
  6. Ken Buckingham & Nancy Devlin & Maggie Tabberer, 2004. "A theoretical framework for TTO valuations and a taxonomy of TTO approaches: results from a pilot study," City University Economics Discussion Papers 04/07, Department of Economics, City University, London. [Downloadable!]
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