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

Kristian Schultz Hansen and Lars Peter Østerdal
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Kristian Schultz Hansen: University of Copenhagen

No 04-05, Discussion Papers from University of Copenhagen. Department of Economics

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.

Keywords: medical decision making; QALYs; varying health; double discounting (search for similar items in EconPapers)
JEL-codes: D11 I10 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2004-03
New Economics Papers: this item is included in nep-dev and nep-hea
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Citations: View citations in EconPapers (2)

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