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Descriptive validity of alternative intertemporal models for health outcomes: an axiomatic test

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  • Marjon van der Pol
  • John Cairns

Abstract

Intertemporal preferences for health are an important concept when modelling health-affecting behaviour and with respect to informing discounting practice in economic evaluation. The aim of this paper is to test robustly stationarity, the key axiom of the Discounted Utility model, and to test whether the quasi‐hyperbolic or generalised hyperbolic model provides a better description of individual time preferences for health outcomes when stationarity is violated. Very little is known about the descriptive validity of the quasi‐hyperbolic model. The different models can lead to different predictions and it is therefore crucial to test which functional form is more descriptively valid. An axiomatic approach is used. Intertemporal preferences were elicited from 203 university students. The results showed that stationarity is violated. Individuals discounted both initial delay and further delays between outcomes at a decreasing rate. This suggests that the quasi‐hyperbolic model may not be appropriate to use in intertemporal analyses of health behaviour. Copyright (C) 2010 John Wiley & Sons, Ltd.

Suggested Citation

  • Marjon van der Pol & John Cairns, 2011. "Descriptive validity of alternative intertemporal models for health outcomes: an axiomatic test," Health Economics, John Wiley & Sons, Ltd., vol. 20(7), pages 770-782, July.
  • Handle: RePEc:wly:hlthec:v:20:y:2011:i:7:p:770-782
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    File URL: http://hdl.handle.net/10.1002/hec.1628
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    References listed on IDEAS

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    Cited by:

    1. Han Bleichrodt & Yu Gao & Kirsten I. M. Rohde, 2016. "A measurement of decreasing impatience for health and money," Journal of Risk and Uncertainty, Springer, vol. 52(3), pages 213-231, June.
    2. McDonald, R.L. & Chilton, S.M. & Jones-Lee, M.W. & Metcalf, H.R.T., 2017. "Evidence of variable discount rates and non-standard discounting in mortality risk valuation," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 152-167.
    3. Strulik, Holger & Trimborn, Timo, 2016. "Hyperbolic discounting can be good for your health," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 11/2016, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
    4. Lizzeri, Alessandro & Yariv, Leeat, 2015. "Collective Self Control," CEPR Discussion Papers 10458, C.E.P.R. Discussion Papers.
    5. Takanori Ida, 2012. "Impatience and Immediacy: A Quasi-Hyperbolic Discounting Approach to Smoking Behavior," Discussion papers e-11-010, Graduate School of Economics Project Center, Kyoto University.

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