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Related Experiment Videos

Time preference in medical decision making and cost-effectiveness analysis

D A Redelmeier1, D N Heller

  • 1Department of Medicine, University of Toronto, Ontario, Canada.

Medical Decision Making : an International Journal of the Society for Medical Decision Making
|July 1, 1993
PubMed
Summary

The exponential discount model may not accurately reflect how people value future health outcomes. This study found that individuals’ time preferences and implicit discount rates vary significantly, challenging the model's assumptions.

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Area of Science:

  • Health Economics
  • Decision Analysis
  • Behavioral Economics

Background:

  • Cost-effectiveness analyses commonly use the exponential discount model to represent time preferences for delayed health outcomes.
  • This model assumes constant, positive discount rates, which may not reflect real-world individual behavior.

Purpose of the Study:

  • To examine the validity of the exponential discount model's assumptions by assessing individuals' time preferences for hypothetical health states.
  • To calculate implicit annual discount rates and analyze their variability.

Main Methods:

  • A random sample of 121 medical professionals (students, house officers, attending physicians) participated.
  • Participants evaluated hypothetical temporary health events (colostomy, blindness, depression) occurring at various future times (1 day to 10 years).

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  • Utility was measured using standard gamble and categorical scaling techniques to derive implicit discount rates.

    • Main Results:

    • A significant portion of calculated discount rates were zero (62.1%) or negative (10.0%).
    • Mean discount rates were higher for shorter time intervals compared to longer ones (0.041 vs. 0.025, p < 0.01).
    • Discount rates varied by health state, with blindness having lower rates than colostomy or depression (p < 0.005).

    Conclusions:

    • Individual time preferences and implicit discount rates are not consistently small, positive, and constant over time.
    • The findings suggest the conventional exponential discount model may be inadequate for fully capturing diverse human time preferences in health-related decisions.