IDEAS home Printed from https://ideas.repec.org/a/eee/jhecon/v43y2015icp229-243.html
   My bibliography  Save this article

Estimating sign-dependent societal preferences for quality of life

Author

Listed:
  • Attema, Arthur E.
  • Brouwer, Werner B.F.
  • l’Haridon, Olivier
  • Pinto, Jose Luis

Abstract

This paper is the first to apply prospect theory to societal health-related decision making. In particular, we allow for utility curvature, equity weighting, sign-dependence, and loss aversion in choices concerning quality of life of other people. We find substantial inequity aversion, both for gains and losses, which can be attributed to both diminishing marginal utility and differential weighting of better-off and worse-off. There are also clear framing effects, which violate expected utility. Moreover, we observe loss aversion, indicating that subjects give more weight to one group's loss than another group's gain of the same absolute magnitude. We also elicited some information on the effect of the age of the studied group. The amount of inequity aversion is to some extent influenced by the age of the considered patients. In particular, more inequity aversion is observed for gains of older people than gains of younger people.

Suggested Citation

  • Attema, Arthur E. & Brouwer, Werner B.F. & l’Haridon, Olivier & Pinto, Jose Luis, 2015. "Estimating sign-dependent societal preferences for quality of life," Journal of Health Economics, Elsevier, vol. 43(C), pages 229-243.
    • Handle: RePEc:eee:jhecon:v:43:y:2015:i:c:p:229-243
    DOI: 10.1016/j.jhealeco.2015.07.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167629615000818
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jhealeco.2015.07.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brouwer, Werner B. F. & van Exel, N. Job A. & Stolk, Elly A., 2005. "Acceptability of less than perfect health states," Social Science & Medicine, Elsevier, vol. 60(2), pages 237-246, January.
    2. Bleichrodt, Han, 1997. "Health utility indices and equity considerations," Journal of Health Economics, Elsevier, vol. 16(1), pages 65-91, February.
    3. Dolan, Paul & Cookson, Richard, 2000. "A qualitative study of the extent to which health gain matters when choosing between groups of patients," Health Policy, Elsevier, vol. 51(1), pages 19-30, February.
    4. Wakker,Peter P., 2010. "Prospect Theory," Cambridge Books, Cambridge University Press, number 9780521765015.
    5. 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.
    6. Johannesson, Magnus & Gerdtham, Ulf-G, 1996. "A note on the estimation of the equity-efficiency trade-off for QALYs," Journal of Health Economics, Elsevier, vol. 15(3), pages 359-368, June.
    7. Xavier Cuadras‐Morató & José‐Luis Pinto‐Prades & José‐María Abellán‐Perpiñán, 2001. "Equity considerations in health care: the relevance of claims," Health Economics, John Wiley & Sons, Ltd., vol. 10(3), pages 187-205, April.
    8. 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.
    9. Abasolo, Ignacio & Tsuchiya, Aki, 2004. "Exploring social welfare functions and violation of monotonicity: an example from inequalities in health," Journal of Health Economics, Elsevier, vol. 23(2), pages 313-329, March.
    10. 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 & University of Caen) 201321, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    11. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    12. Jonathan Shalev, 2002. "Loss Aversion and Bargaining," Theory and Decision, Springer, vol. 52(3), pages 201-232, May.
    13. Mohammed Abdellaoui & Han Bleichrodt & Olivier L’Haridon, 2008. "A tractable method to measure utility and loss aversion under prospect theory," Journal of Risk and Uncertainty, Springer, vol. 36(3), pages 245-266, June.
    14. Nathalie Etchart-Vincent & Olivier l’Haridon, 2011. "Monetary incentives in the loss domain and behavior toward risk: An experimental comparison of three reward schemes including real losses," Journal of Risk and Uncertainty, Springer, vol. 42(1), pages 61-83, February.
    15. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    16. Brouwer, Werner B.F. & van Exel, N. Job A., 2005. "Expectations regarding length and health related quality of life: Some empirical findings," Social Science & Medicine, Elsevier, vol. 61(5), pages 1083-1094, September.
    17. Johannesson, Magnus & Johansson, Per-Olov, 1997. "Is the valuation of a QALY gained independent of age? Some empirical evidence," Journal of Health Economics, Elsevier, vol. 16(5), pages 589-599, October.
    18. Wagstaff, Adam, 1991. "QALYs and the equity-efficiency trade-off," Journal of Health Economics, Elsevier, vol. 10(1), pages 21-41, May.
    19. Ignacio Abásolo & Aki Tsuchiya, 2013. "Is more health always better for society? Exploring public preferences that violate monotonicity," Theory and Decision, Springer, vol. 74(4), pages 539-563, April.
    20. Abasolo, Ignacio & Tsuchiya, Aki, 2004. "Exploring social welfare functions and violation of monotonicity: an example from inequalities in health--a reply to Jan Abel Olsen," Journal of Health Economics, Elsevier, vol. 23(2), pages 333-334, March.
    21. Alan Williams, 1997. "Intergenerational Equity: An Exploration of the ‘Fair Innings’ Argument," Health Economics, John Wiley & Sons, Ltd., vol. 6(2), pages 117-132, March.
    22. Han Bleichrodt & John Miyamoto, 2003. "A Characterization of Quality-Adjusted Life-Years Under Cumulative Prospect Theory," Mathematics of Operations Research, INFORMS, vol. 28(1), pages 181-193, February.
    23. Bleichrodt, Han & Diecidue, Enrico & Quiggin, John, 2004. "Equity weights in the allocation of health care: the rank-dependent QALY model," Journal of Health Economics, Elsevier, vol. 23(1), pages 157-171, January.
    24. Lars Lindholm & Måns Rosén, 1998. "On the measurement of the nation's equity adjusted health," Health Economics, John Wiley & Sons, Ltd., vol. 7(7), pages 621-628, November.
    25. Peter Wakker & Daniel Deneffe, 1996. "Eliciting von Neumann-Morgenstern Utilities When Probabilities Are Distorted or Unknown," Management Science, INFORMS, vol. 42(8), pages 1131-1150, August.
    26. Bleichrodt, Han & Doctor, Jason & Stolk, Elly, 2005. "A nonparametric elicitation of the equity-efficiency trade-off in cost-utility analysis," Journal of Health Economics, Elsevier, vol. 24(4), pages 655-678, July.
    27. 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, August.
    28. Schwappach, David L.B. & Strasmann, Thomas J., 2006. ""Quick and dirty numbers"?: The reliability of a stated-preference technique for the measurement of preferences for resource allocation," Journal of Health Economics, Elsevier, vol. 25(3), pages 432-448, May.
    29. Simon Gächter & Eric J. Johnson & Andreas Herrmann, 2022. "Individual-level loss aversion in riskless and risky choices," Theory and Decision, Springer, vol. 92(3), pages 599-624, April.
    30. 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, February.
    31. Sylvie M. C. van Osch & Wilbert B. van den Hout & Anne M. Stiggelbout, 2006. "Exploring the Reference Point in Prospect Theory: Gambles for Length of Life," Medical Decision Making, , vol. 26(4), pages 338-346, July.
    32. Paul Dolan & Aki Tsuchiya, 2011. "Determining the parameters in a social welfare function using stated preference data: an application to health," Applied Economics, Taylor & Francis Journals, vol. 43(18), pages 2241-2250.
    33. Dolan, Paul, 1998. "The measurement of individual utility and social welfare," Journal of Health Economics, Elsevier, vol. 17(1), pages 39-52, January.
    34. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    35. Lancsar, Emily & Wildman, John & Donaldson, Cam & Ryan, Mandy & Baker, Rachel, 2011. "Deriving distributional weights for QALYs through discrete choice experiments," Journal of Health Economics, Elsevier, vol. 30(2), pages 466-478, March.
    36. Polman, Evan, 2012. "Self–other decision making and loss aversion," Organizational Behavior and Human Decision Processes, Elsevier, vol. 119(2), pages 141-150.
    37. Dolan, Paul & Robinson, Angela, 2001. "The measurement of preferences over the distribution of benefits: The importance of the reference point," European Economic Review, Elsevier, vol. 45(9), pages 1697-1709, October.
    38. Bosworth, Ryan & Cameron, Trudy Ann & DeShazo, J.R., 2009. "Demand for environmental policies to improve health: Evaluating community-level policy scenarios," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 293-308, May.
    39. Sylvie M. C. van Osch & Anne M. Stiggelbout, 2008. "The construction of standard gamble utilities," Health Economics, John Wiley & Sons, Ltd., vol. 17(1), pages 31-40, January.
    40. Erik Nord & Jose Luis Pinto & Jeff Richardson & Paul Menzel & Peter Ubel, 1999. "Incorporating societal concerns for fairness in numerical valuations of health programmes," Health Economics, John Wiley & Sons, Ltd., vol. 8(1), pages 25-39, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hurley, Jeremiah & Mentzakis, Emmanouil & Walli-Attaei, Marjan, 2020. "Inequality aversion in income, health, and income-related health," Journal of Health Economics, Elsevier, vol. 70(C).
    2. Matthew Robson & Miqdad Asaria & Richard Cookson & Aki Tsuchiya & Shehzad Ali, 2017. "Eliciting the Level of Health Inequality Aversion in England," Health Economics, John Wiley & Sons, Ltd., vol. 26(10), pages 1328-1334, October.
    3. Arthur E. Attema & Olivier L’Haridon & Gijs Kuilen, 2023. "An experimental investigation of social risk preferences for health," Theory and Decision, Springer, vol. 95(3), pages 379-403, October.
    4. Attema, Arthur E. & L'Haridon, Olivier & van de Kuilen, Gijs, 2023. "Decomposing social risk preferences for health and wealth," Journal of Health Economics, Elsevier, vol. 90(C).
    5. Shaun Da Costa & Owen O'Donnell & Raf Van Gestel, 2023. "Distributionally Sensitive Measurement and Valuation of Population Health," Tinbergen Institute Discussion Papers 23-017/V, Tinbergen Institute.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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, February.
    2. Lipman, Stefan A. & Brouwer, Werner B.F. & Attema, Arthur E., 2020. "Living up to expectations: Experimental tests of subjective life expectancy as reference point in time trade-off and standard gamble," Journal of Health Economics, Elsevier, vol. 71(C).
    3. Arthur E. Attema & Werner B. F. Brouwer & Jose Luis Pinto‐Prades, 2022. "Reference‐dependent age weighting of quality‐adjusted life years," Health Economics, John Wiley & Sons, Ltd., vol. 31(12), pages 2515-2536, December.
    4. Abellán Perpiñán, José Mª & Sánchez Martínez,Fernando I. & Martínez Pérez, Jorge E., 2007. "La medición del bienestar social relacionado con la salud/The Measurement of the Health Related Social Welfare," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 25, pages 927-950, Diciembre.
    5. 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.
    6. Aki Tsuchiya, 2012. "Distributional Judgements in the Context of Economic Evaluation," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 38, Edward Elgar Publishing.
    7. Gu, Yuanyuan & Lancsar, Emily & Ghijben, Peter & Butler, James RG & Donaldson, Cam, 2015. "Attributes and weights in health care priority setting: A systematic review of what counts and to what extent," Social Science & Medicine, Elsevier, vol. 146(C), pages 41-52.
    8. Robson, Matthew & O’Donnell, Owen & Van Ourti, Tom, 2024. "Aversion to health inequality — Pure, income-related and income-caused," Journal of Health Economics, Elsevier, vol. 94(C).
    9. Mæstad, Ottar & Norheim, Ole Frithjof, 2009. "Eliciting people's preferences for the distribution of health: A procedure for a more precise estimation of distributional weights," Journal of Health Economics, Elsevier, vol. 28(3), pages 570-577, May.
    10. Arthur E. Attema & Marieke Krol & Job Exel & Werner B. F. Brouwer, 2018. "New findings from the time trade-off for income approach to elicit willingness to pay for a quality adjusted life year," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(2), pages 277-291, March.
    11. Kpegli, Yao Thibaut & Corgnet, Brice & Zylbersztejn, Adam, 2023. "All at once! A comprehensive and tractable semi-parametric method to elicit prospect theory components," Journal of Mathematical Economics, Elsevier, vol. 104(C).
    12. Mæstad, Ottar & Norheim, Ole Frithjof, 2012. "A universal preference for equality in health? Reasons to reconsider properties of applied social welfare functions," Social Science & Medicine, Elsevier, vol. 75(10), pages 1836-1843.
    13. 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.
    14. Simon McNamara & John Holmes & Abigail K. Stevely & Aki Tsuchiya, 2020. "How averse are the UK general public to inequalities in health between socioeconomic groups? A systematic review," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(2), pages 275-285, March.
    15. Bleichrodt, Han & Doctor, Jason & Stolk, Elly, 2005. "A nonparametric elicitation of the equity-efficiency trade-off in cost-utility analysis," Journal of Health Economics, Elsevier, vol. 24(4), pages 655-678, July.
    16. Ulrich Schmidt & Horst Zank, 2012. "A genuine foundation for prospect theory," Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 97-113, October.
    17. Mulligan, Karen & Baid, Drishti & Doctor, Jason N. & Phelps, Charles E. & Lakdawalla, Darius N., 2024. "Risk preferences over health: Empirical estimates and implications for medical decision-making," Journal of Health Economics, Elsevier, vol. 94(C).
    18. Yao Thibaut Kpegli, 2023. "Smoothing Spline Method for Measuring Prospect Theory Components," Working Papers 2303, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    19. Géraldine Bocquého & Julien Jacob & Marielle Brunette, 2023. "Prospect theory in multiple price list experiments: further insights on behaviour in the loss domain," Theory and Decision, Springer, vol. 94(4), pages 593-636, May.
    20. Stefan A. Lipman & Werner B.F. Brouwer & Arthur E. Attema, 2019. "QALYs without bias? Nonparametric correction of time trade‐off and standard gamble weights based on prospect theory," Health Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 843-854, July.

    More about this item

    Keywords

    Equity weighting; Health-related social welfare function; Loss aversion; Prospect theory; QALYs;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I10 - Health, Education, and Welfare - - Health - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:43:y:2015:i:c:p:229-243. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505560 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.