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Estimating sign-dependent societal preferences for quality of life

Author

Listed:
  • Arthur E. Attema

    () (Erasmus School of Economics - Erasmus University Rotterdam, iBMG - Erasmus University Rotterdam)

  • Werner B.F. Brouwer

    (Erasmus School of Economics - Erasmus University Rotterdam, iBMG - Erasmus University Rotterdam)

  • Olivier L’haridon

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Jose Luis Pinto

    (Yunus Centre - Glasgow Caledonian University)

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

  • Arthur E. Attema & Werner B.F. Brouwer & Olivier L’haridon & Jose Luis Pinto, 2015. "Estimating sign-dependent societal preferences for quality of life," Post-Print halshs-01183561, HAL.
  • Handle: RePEc:hal:journl:halshs-01183561
    DOI: 10.1016/j.jhealeco.2015.07.006
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01183561
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    Cited by:

    1. 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.

    More about this item

    Keywords

    Equity weighting; health-related social welfare function; loss aversion; prospect theory; QALYs;

    JEL classification:

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

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