On what basis should health be discounted?

Area of Science:

• Health Economics
• Decision Analysis
• Public Health Policy

Background:

• Determining appropriate discount rates is crucial for evaluating long-term healthcare interventions.
• Existing methods for discount rate selection may not adequately capture health-specific time preferences.

Purpose of the Study:

• To establish a principled approach for selecting discount rates in healthcare economic evaluations.
• To ensure consistency in applying discount rates to both health outcomes and costs.

Main Methods:

• The study advocates for basing the discount rate on the time preference rate for health.
• It emphasizes framing intertemporal choices to reflect the perspectives of health planners and decision-makers.
• The limited tradeability of health is considered in eliciting these preferences.

Main Results:

• A single, consistent discount rate, derived from health's time preference, should be applied to both health gains and program costs.
• Intertemporal choice elicitation requires careful framing to simulate real-world decision-making scenarios.

Conclusions:

• Aligning discount rates with health's time preference rate enhances the economic rationality of healthcare program evaluations.
• Methodological adjustments in eliciting time preferences are necessary for accurate health economic modeling.