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A Note on QALYs, Time Tradeoff, and Discounting

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  • Magnus Johannesson
  • Joseph S. Pliskin
  • Milton C. Weinstein

Abstract

The theoretical model of QALYs is based on risk neutrality with respect to life years or constant proportional risk posture with respect to life years. It is shown that discounting of QALYs is inconsistent with these assumptions. For discounting to be consistent with individual preferences in a QALY model, individuals have to be risk-neutral with respect to discounted life years or exhibit constant proportional risk posture with respect to discounted life years. For the time-tradeoff method to be consistent with these assumptions, the QALY weights have to be derived by dividing the number of discounted life years in full health by the number of discounted life years in the assessed health states. Key words: quality-adjusted life years; discounting; time tradeoff; standard gamble; individual preferences. (Med Decis Making 1994;14:188-193)

Suggested Citation

  • Magnus Johannesson & Joseph S. Pliskin & Milton C. Weinstein, 1994. "A Note on QALYs, Time Tradeoff, and Discounting," Medical Decision Making, , vol. 14(2), pages 188-193, April.
    • Handle: RePEc:sae:medema:v:14:y:1994:i:2:p:188-193
    DOI: 10.1177/0272989X9401400212
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    References listed on IDEAS

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    1. Victor R. Fuchs, 1982. "Economic Aspects of Health," NBER Books, National Bureau of Economic Research, Inc, number fuch82-1, July.
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    3. Victor R. Fuchs, 1982. "Time Preference and Health: An Exploratory Study," NBER Chapters, in: Economic Aspects of Health, pages 93-120, National Bureau of Economic Research, Inc.
    4. Moore, Michael J & Viscusi, W Kip, 1990. "Models for Estimating Discount Rates for Long-term Health Risks Using Labor Market Data," Journal of Risk and Uncertainty, Springer, vol. 3(4), pages 381-401, December.
    5. Fuchs, Victor R. (ed.), 1982. "Economic Aspects of Health," National Bureau of Economic Research Books, University of Chicago Press, number 9780226267852, June.
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