Jove
Visualize
Contact Us
JoVE
x logofacebook logolinkedin logoyoutube logo
ABOUT JoVE
OverviewLeadershipBlogJoVE Help Center
AUTHORS
Publishing ProcessEditorial BoardScope & PoliciesPeer ReviewFAQSubmit
LIBRARIANS
TestimonialsSubscriptionsAccessResourcesLibrary Advisory BoardFAQ
RESEARCH
JoVE JournalMethods CollectionsJoVE Encyclopedia of ExperimentsArchive
EDUCATION
JoVE CoreJoVE BusinessJoVE Science EducationJoVE Lab ManualFaculty Resource CenterFaculty Site
Terms & Conditions of Use
Privacy Policy
Policies

Related Experiment Videos

Discounting costs and effects: a reconsideration

B A van Hout1

  • 1Institute for Medical Technology Assessment, Erasmus University, Rotterdam, The Netherlands.

Health Economics
|December 9, 1998
PubMed
Summary

Discount rates for societal costs and benefits should consider income and health growth, alongside utility. Equal rates are derived under perfect market assumptions, but alternative rates may be necessary.

Related Concept Videos

You might also read

Related Articles

Articles linked to this work by shared authors, journal, and citation graph.

Sort by
Same author

Survival after transfusion in the Netherlands.

Vox sanguinis·2010
Same author

The PROTON study: profiles of blood product transfusion recipients in the Netherlands.

Vox sanguinis·2010
Same author

Economic evaluation of zoledronic acid for the prevention of osteoporotic fractures in postmenopausal women with early-stage breast cancer receiving aromatase inhibitors in the UK.

Annals of oncology : official journal of the European Society for Medical Oncology·2009
Same author

Cost-effectiveness of additional hepatitis B virus nucleic acid testing of individual donations or minipools of six donations in the Netherlands.

Transfusion·2009
Same author

Monitoring viral incidence rates: tools for the implementation of European Union regulations.

Vox sanguinis·2009
Same author

Clinical practice guideline for cardiovascular risk management in the Netherlands.

The Netherlands journal of medicine·2008

Area of Science:

  • Health Economics
  • Societal Utility Theory
  • Intergenerational Equity

Background:

  • Discounting is crucial for evaluating long-term societal investments.
  • Standard economic models often use simplified assumptions for discount rates.
  • Existing inconsistency arguments in discounting warrant re-examination.

Purpose of the Study:

  • To derive appropriate discount rates for costs and benefits based on societal utility.
  • To re-evaluate traditional inconsistency arguments in economic discounting.
  • To explore the implications of market assumptions on discount rate determination.

Main Methods:

  • Development of a societal utility function weighting current and future generations equally.
  • Discounting costs based on expected income growth and marginal utility of consumption.
  • Discounting effects based on expected health improvements and marginal utility of health.

Main Results:

  • Equal discount rates for costs and benefits are derived under perfect market assumptions.
  • The assumption of a perfect market determining growth rates is identified as highly idealized.
  • Traditional inconsistency arguments by Weinstein, Stason, Keeler, and Cretin are re-evaluated and contextualized.

Conclusions:

  • Different discount rates may be required due to the idealized nature of market assumptions.
  • The Weinstein and Stason inconsistency argument arises only under growth equilibrium.
  • The Keeler and Cretin paradox is resolved when considering indefinite program continuation.

Related Experiment Videos