Are Discount Rates Too High? Population Health and Intergenerational Equity

R. Scott Braithwaite and Mark S. Roberts
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R. Scott Braithwaite: Division of Comparative Effectiveness and Decision Science, Department of Population Health, NYU School of Medicine, New York, NY, USA
Mark S. Roberts: Department of Health Policy and Management, University of Pittsburgh Public Health, Pittsburgh, PA, USA

Medical Decision Making, 2021, vol. 41, issue 2, 245-249

Abstract: Increasing attention is being paid to policy decisions in which shorter-term benefits may be eclipsed by longer-term harms, such as environmental damage. Health policy decisions have largely been spared this scrutiny, even though they too may contribute to longer-term harms. Any healthy population or society must sustain itself through reproduction, and therefore, transgenerational outcomes should be of intrinsic importance from a societal perspective. Yet, the discount rates typically employed in cost-effectiveness analyses have the effect of minimizing the importance of transgenerational health outcomes. We argue that, because cost-effectiveness analysis is based on foundational axioms of decision theory, it should value transgenerational outcomes consistently with those axioms, which require discount rates substantially lower than 3%. We discuss why such lower rates may not violate the Cretin-Keeler paradox.

Keywords: cost-effectiveness analysis; discount rate; equity; time preference (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:medema:v:41:y:2021:i:2:p:245-249

DOI: 10.1177/0272989X20979816

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