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Tests of Utility Independence When Health Varies over Time

Author

Listed:
  • Anne Spencer

    (Queen Mary, University of London)

  • Angela Robinson

    (University of East Anglia)

Abstract

In the conventional QALY model, people's preferences are assumed to satisfy utility independence. When health varies over time, utility independence implies that the value attached to a health state is independent of the health state that arise before or after it. In this paper we set out to test the extent to which utility independence is undermined by sequence and duration effects. Two separate studies were conducted involving a total of 155 respondents. In study one, we conducted 5 tests of utility independence using a standard gamble question. Three of the tests of utility independence were repeated in study two after randomisation was introduced in order to take account of possible ordering effects. Utility independence holds in the majority of cases examined here and so our work generally supports the use of utility independence to derive more tractable models.

Suggested Citation

  • Anne Spencer & Angela Robinson, 2007. "Tests of Utility Independence When Health Varies over Time," Working Papers 596, Queen Mary University of London, School of Economics and Finance.
  • Handle: RePEc:qmw:qmwecw:wp596
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    File URL: http://www.econ.qmul.ac.uk/media/econ/research/workingpapers/archive/wp596.pdf
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    References listed on IDEAS

    as
    1. Daniel Kahneman & Robert Sugden, 2005. "Experienced Utility as a Standard of Policy Evaluation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(1), pages 161-181, September.
    2. Guerrero, Ana M. & Herrero, Carmen, 2005. "A semi-separable utility function for health profiles," Journal of Health Economics, Elsevier, vol. 24(1), pages 33-54, January.
    3. Doctor, Jason N. & Bleichrodt, Han & Miyamoto, John & Temkin, Nancy R. & Dikmen, Sureyya, 2004. "A new and more robust test of QALYs," Journal of Health Economics, Elsevier, vol. 23(2), pages 353-367, March.
    4. Bleichrodt, Han & Quiggin, John, 1997. "Characterizing QALYs under a General Rank Dependent Utility Model," Journal of Risk and Uncertainty, Springer, vol. 15(2), pages 151-165, November.
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    Cited by:

    1. Hougaard, Jens Leth & Moreno-Ternero, Juan D. & Østerdal, Lars Peter, 2013. "A new axiomatic approach to the evaluation of population health," Journal of Health Economics, Elsevier, vol. 32(3), pages 515-523.
    2. Attema, Arthur E. & Brouwer, Werner B.F., 2012. "A test of independence of discounting from quality of life," Journal of Health Economics, Elsevier, vol. 31(1), pages 22-34.
    3. Han Bleichrodt & Jose Luis Pinto, 2012. "Conceptual Foundations for Health Utility Measurement," Chapters,in: The Elgar Companion to Health Economics, Second Edition, chapter 35 Edward Elgar Publishing.

    More about this item

    Keywords

    Utility independence; QALY;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I10 - Health, Education, and Welfare - - Health - - - General

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