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Discounting future health gains: an empirical enquiry into the influence of growing life expectancy

  • Ana Bobinac
  • Werner Brouwer
  • Job van Exel

We tested the influence of the growth in life expectancy over time on social time preferences for health. Growing life expectancy of future generations should raise social discount rates for health because of diminishing marginal utility of additional health gains and equity reasons reflecting the desire for a more equitable distribution of benefits over generations. This influence has, however, been largely ignored in empirical studies. We provide a first comprehensive analysis of how time preferences for health gains vary with projected growth rates, indicating the importance of subjective expectations about the growth in life expectancy in the elicitation of social time preference. Six hundred and fifty-six respondents, representative of the Dutch population, completed one of four questionnaires, differing in the projected growth in life expectancy. Results showed that individuals discount future health gains at different rates, depending on the latency period and on the projected or expected growth in life expectancy. As hypothesized, discount rates increased with higher growth rates. The association between observed discount rates and expectations regarding future life expectancy was confirmed, suggesting that discount rates for health may depend on future life expectancy. In light of our results, specifying life expectancy of future generations in time preference exercises appears appropriate. Copyright (C) 2009 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1578
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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 20 (2011)
Issue (Month): 1 (January)
Pages: 111-119

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Handle: RePEc:wly:hlthec:v:20:y:2011:i:1:p:111-119
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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