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QALYs When Health Varies Over Time: An Analysis of Model Identification and Parameter Estimation from Time Trade-Off and Standard Gamble Scores

Author

Listed:
  • Kristian Schultz Hansen

    (University of Copenhagen)

  • Lars Peter Østerdal

    (Institute of Economics, University of Copenhagen)

Abstract

In the first part of the paper, we consider various QALY (quality-adjusted life year) models in situations where health varies over time, and provide a theoretical analysis of model identification and parameter estimation from time trade-off and standard gamble scores. We investigate deterministic and probabilistic models, and consider five different families of discount factors in all. The second part of the paper contains a discussion of some recurrent themes from related literature. Among other things, we question the standard gamble method as a gold standard in health preference measurement, re-examine the role of constant proportional trade-off, and discuss so-called double discounting of QALYs. We also argue that it is not a matter of choosing between time trade-off and standard gamble procedures, since both types of scores are generally needed in order to be able to disentagle risk aversion from discounting. More broadly, we find that conclusions drawn from the analysis of models involving chronic health states only may not necesssarily apply to situations where health varies over time. One reason is that risk aversion and discounting may collapse to the same thing when all health states are chronic.

Suggested Citation

  • Kristian Schultz Hansen & Lars Peter Østerdal, 2004. "QALYs When Health Varies Over Time: An Analysis of Model Identification and Parameter Estimation from Time Trade-Off and Standard Gamble Scores," Discussion Papers 04-05, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:0405
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    File URL: http://www.econ.ku.dk/english/research/publications/wp/2004/0405.pdf/
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    References listed on IDEAS

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    1. Osterdal, Lars Peter, 2005. "Axioms for health care resource allocation," Journal of Health Economics, Elsevier, vol. 24(4), pages 679-702, July.
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    Cited by:

    1. Cairns, John, 2006. "Developments in discounting: With special reference to future health events," Resource and Energy Economics, Elsevier, vol. 28(3), pages 282-297, August.
    2. Osterdal, Lars Peter, 2005. "Axioms for health care resource allocation," Journal of Health Economics, Elsevier, vol. 24(4), pages 679-702, July.

    More about this item

    Keywords

    medical decision making; QALYs; varying health; double discounting;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • I10 - Health, Education, and Welfare - - Health - - - General

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