The construction of standard gamble utilities

Sylvie M. C. van Osch and Anne M. Stiggelbout

Health Economics, 2008, vol. 17, issue 1, 31-40

Abstract: Health effects for cost‐effectiveness analysis are best measured in life years, with quality of life in each life year expressed in terms of utilities. The standard gamble (SG) has been the gold standard for utility measurement. However, the biases of probability weighting, loss aversion, and scale compatibility have an inconclusive effect on SG utilities. We determined their effect on SG utilities using qualitative data to assess the reference point and the focus of attention. While thinking aloud, 45 healthy respondents provided SG utilities for six rheumatoid arthritis health states. Reference points, goals, and focuses of attention were coded. To assess the effect of scale compatibility, correlations were assessed between focus of attention and mean utility. The certain outcome served most frequently as reference point, the SG was perceived as a mixed gamble. Goals were mostly mentioned with respect to this outcome. Scale compatibility led to a significant upward bias in utilities; attention lay relatively more on the low outcome and this was positively correlated with mean utility. SG utilities should be corrected for loss aversion and probability weighting with the mixed correction formula proposed by prospect theory. Scale compatibility will likely still bias SG utilities, calling for research on a correction. Copyright © 2007 John Wiley & Sons, Ltd.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:wly:hlthec:v:17:y:2008:i:1:p:31-40

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