Estimating sign-dependent societal preferences for quality of life

Arthur Attema, Werner Brouwer, Olivier L'Haridon and Jose-Luis Pinto-Prades

MPRA Paper from University Library of Munich, Germany

Abstract: This paper is the first to apply prospect theory to societal health-related decision making. In particular, we allow for utility curvature, equity weighting, sign-dependence, and loss aversion in choices concerning quality of life of other people. We find substantial inequity aversion, both for gains and losses, which can be attributed to both diminishing marginal utility and differential weighting of better-off and worse-off. There are also clear framing effects, which violate expected utility. Moreover, we observe loss aversion, indicating that respondents give more weight to one group’s loss than another group’s gain of the same absolute magnitude. We also elicited some information on the effect of the age of the studied group. The amount of inequity aversion is to some extent influenced by the age of the considered patients. In particular, more inequity aversion is observed for gains of older people than gains of younger people.

Keywords: equity weighting; loss aversion; prospect theory; QALYs (search for similar items in EconPapers)
JEL-codes: D63 I10 (search for similar items in EconPapers)
Date: 2014-09-02
New Economics Papers: this item is included in nep-age, nep-hap, nep-hea and nep-upt
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Related works:
Journal Article: Estimating sign-dependent societal preferences for quality of life (2015)
Working Paper: Estimating sign-dependent societal preferences for quality of life (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:58262

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