A test of independence of discounting from quality of life
Arthur Attema and
Werner Brouwer ()
Journal of Health Economics, 2012, vol. 31, issue 1, 22-34
The quality-adjusted life-years (QALY) model assumes quality and quantity of life can be multiplied into a single index and requires quality and quantity to be mutually independent, which need not hold empirically. This paper proposes a new test for measuring independence of utility of life duration from quality of life in a riskless setting. We use a large representative sample of Dutch citizens and include two health states generally considered better than dead (BTD) and one health state considered worse than dead (WTD). Independence cannot be rejected when comparing the BTD health states, but is rejected when comparing the BTD states with the WTD state. In particular, utility of life duration becomes more concave for the WTD state. This may suggest that independence holds only for BTD health states. This has implications for the QALY model and would require using sign-dependent utility of life duration functions.
Keywords: Discounting; QALY model; Utility of life duration (search for similar items in EconPapers)
JEL-codes: D90 I10 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:31:y:2012:i:1:p:22-34
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