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Related Experiment Videos

A note on QALYs, time tradeoff, and discounting

M Johannesson1, J S Pliskin, M C Weinstein

  • 1Centre for Health Economics, Stockholm School of Economics, Sweden.

Medical Decision Making : an International Journal of the Society for Medical Decision Making
|April 1, 1994
PubMed
Summary

Discounting Quality-Adjusted Life Years (QALYs) conflicts with standard risk-neutral assumptions. Adjusting QALY models requires risk neutrality towards discounted life years for consistency with individual preferences.

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Area of Science:

  • Health economics
  • Decision analysis
  • Outcome measurement

Background:

  • The standard theoretical model of Quality-Adjusted Life Years (QALYs) assumes risk neutrality concerning life years.
  • Discounting is commonly applied to QALYs in economic evaluations, but its consistency with underlying assumptions is debated.

Purpose of the Study:

  • To examine the consistency of discounting QALYs with the theoretical assumptions of risk neutrality or constant proportional risk posture.
  • To identify conditions under which discounting QALYs aligns with individual preferences.

Main Methods:

  • Theoretical modeling of QALYs and discounting.
  • Analysis of risk preferences with respect to life years and discounted life years.
  • Evaluation of the time-tradeoff method in the context of discounting.

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Main Results:

  • Discounting QALYs is inconsistent with the standard assumption of risk neutrality with respect to life years.
  • Consistency requires risk neutrality or constant proportional risk posture concerning discounted life years.
  • The time-tradeoff method for deriving QALY weights must be adjusted to account for discounting.

Conclusions:

  • Standard discounting practices for QALYs may not align with underlying theoretical assumptions.
  • Adjustments to QALY modeling are necessary to ensure consistency between discounting and individual risk preferences.
  • Recommendations are provided for modifying the time-tradeoff method to incorporate discounting appropriately.