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A consistency test of the time trade-off

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  • Bleichrodt, Han
  • Pinto, Jose Luis
  • Maria Abellan-Perpinan, Jose

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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  • Bleichrodt, Han & Pinto, Jose Luis & Maria Abellan-Perpinan, Jose, 2003. "A consistency test of the time trade-off," Journal of Health Economics, Elsevier, vol. 22(6), pages 1037-1052, November.
  • Handle: RePEc:eee:jhecon:v:22:y:2003:i:6:p:1037-1052
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    10. 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.
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    14. Anne Spencer, 2003. "The TTO method and procedural invariance," Health Economics, John Wiley & Sons, Ltd., vol. 12(8), pages 655-668.
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    Cited by:

    1. Attema, Arthur E. & Brouwer, Werner B.F. & l’Haridon, Olivier, 2013. "Prospect theory in the health domain: A quantitative assessment," Journal of Health Economics, Elsevier, vol. 32(6), pages 1057-1065.
    2. Arthur Attema & Werner Brouwer, 2012. "The way that you do it? An elaborate test of procedural invariance of TTO, using a choice-based design," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(4), pages 491-500, August.
    3. Keith Tolley & Catherine Goad & Yunni Yi & Penny Maroudas & Amin Haiderali & Gwilym Thompson, 2013. "Utility elicitation study in the UK general public for late-stage chronic lymphocytic leukaemia," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(5), pages 749-759, October.
    4. Attema, Arthur E. & Brouwer, Werner B.F., 2012. "A test of independence of discounting from quality of life," Journal of Health Economics, Elsevier, vol. 31(1), pages 22-34.
    5. 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.
    6. Attema, Arthur E. & Brouwer, Werner B.F., 2009. "The correction of TTO-scores for utility curvature using a risk-free utility elicitation method," Journal of Health Economics, Elsevier, vol. 28(1), pages 234-243, January.
    7. 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.
    8. Breuer, Wolfgang & Soypak, K. Can, 2015. "Framing effects in intertemporal choice tasks and financial implications," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 152-167.
    9. 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.
    10. 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.
    11. Buckingham, K. & Devlin, N. & Tabberer, M., 2004. "A theoretical framework for TTO valuations and a taxonomy of TTO approaches: results from a pilot study," Working Papers 04/07, Department of Economics, City University London.
    12. Attema, Arthur E. & Brouwer, Werner B.F., 2013. "In search of a preferred preference elicitation method: A test of the internal consistency of choice and matching tasks," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 126-140.
    13. Arthur Attema & Yvette Edelaar-Peeters & Matthijs Versteegh & Elly Stolk, 2013. "Time trade-off: one methodology, different methods," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(1), pages 53-64, July.
    14. Arthur E. Attema & Werner B.F. Brouwer & Olivier l'Haridon, 2013. "A quantification of prospect theory in the health domain," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201321, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    15. 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.
    16. Attema, Arthur E. & Brouwer, Werner B.F. & l’Haridon, Olivier & Pinto, Jose Luis, 2016. "An elicitation of utility for quality of life under prospect theory," Journal of Health Economics, Elsevier, vol. 48(C), pages 121-134.
    17. Oliver, Adam & Wolff, Jonathan, 2014. "Are people consistent when trading time for health?," Economics & Human Biology, Elsevier, vol. 15(C), pages 41-46.
    18. Diego Ossa & Andrew Briggs & Emma McIntosh & Warren Cowell & Tim Littlewood & Mark Sculpher, 2007. "Recombinant Erythropoietin for Chemotherapy-Related Anaemia," PharmacoEconomics, Springer, vol. 25(3), pages 223-237, March.
    19. José Mª Abellán & José Luis Pinto & Ildefonso Méndez & Xabier Badía, 2004. "A test of the predictive validity of non-linear QALY models using time trade-off utilities," Economics Working Papers 741, Department of Economics and Business, Universitat Pompeu Fabra.

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    • I10 - Health, Education, and Welfare - - Health - - - General

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