The prevention puzzle.

Promoting prevention is an important goal of public policy. Fifty years ago, Ehrlich and Becker (J Polit Econ 80:623-648, 1972) proposed a simple model of prevention (or self-protection as they called it). Surprisingly enough, subsequent research, mainly within the expected utility paradigm, showed that it is hard to derive clear predictions within this simple model that can help to guide policy. This is what I refer to as the prevention puzzle: why is it so hard for economic theory to guide prevention decisions? In this article I try to shed light on this question. I review the existing literature and add some tentative new results under nonexpected utility. While the impact of risk aversion on prevention is complex, three factors seem to contribute unambiguously to underprevention: prudence, likelihood insensitivity, and loss aversion. I conclude by giving some ideas how empirical research may contribute to the understanding of prevention decisions and help to solve the prevention puzzle.

The QALY at 50: One story many voices.

Research on quality adjusted life year (QALY) has been underway for just over 50 years, which seems like a suitable milestone to review its history. The purpose of this study is to provide a historical overview of why the QALY was developed, the key theoretical work undertaken by Torrance, Bush and Fanshel and how two seminal papers shaped its subsequent development. Moving the QALY forward - there are several historical and reflective exercises. The historical interplay between politics, policy and the challenges facing the National Health Service (NHS) in formulating the QALY concept in the UK has been explored in some depth already, whilst the conceptualization and development of the methodological framework is relatively underexplored. We address this gap by viewing the QALY through the lens of the methodological debates, reflecting upon two key papers underpinning the QALY methodology and how these methods have been developed over time. In part the changes in technology e.g. Google Scholar, and the availability of tools to search for early uses of the QALY allow us to better understand the historical context in which the theoretical development of the QALY has taken place. Here we celebrate two seminal papers that shaped early QALY development. The first section provides a history of these papers, summaries their contributions and explores the uptake of these papers over time. The second section reviews the methodological debates that have surrounded the QALY over the last 50 years and looks at how the QALY has moved to address these challenges. The third section presents the voices of diverse commentators representing the field of health economics who have contributed to the subsequent development of the QALY in both theoretical and empirical capacities and captures their thoughts about future research and policy use of QALYS.

Insurance decisions under nonperformance risk and ambiguity.

An important societal problem is that people underinsure against risks that are unlikely or occur in the far future, such as natural disasters and long-term care needs. One explanation is that uncertainty about the risk of non-reimbursement induces ambiguity averse and risk prudent decision makers to take out less insurance. We set up an insurance experiment to test this explanation. Consistent with the theoretical predictions, we find that the demand for insurance is lower when the nonperformance risk is ambiguous than when it is known and when decision makers are risk prudent. We cannot attribute the lower take-up of insurance to our measure of ambiguity aversion, probably because ambiguity attitudes are richer than aversion alone. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s11166-021-09364-7.

A comparison of individual and collective decision making for standard gamble and time trade-off.

Quality-Adjusted Life-Years (QALYs) are typically derived from individual preferences over health episodes. This paper reports the first experimental investigation into the effects of collective decision making on health valuations, using both time trade-off (TTO) and standard gamble (SG) tasks. We investigated collective decision making in dyads, by means of a mixed-subjects design where we control for learning effects. Our data suggest that collective decision making has little effect on decision quality, as no effects were observed on decision consistency and monotonicity for both methods. Furthermore, QALY weights remained similar between individual and collective decisions, and the typical difference in elicited weights between TTO and SG was not affected. These findings suggest that consulting with others has little effect on health state valuation, although learning may have. Additionally, our findings add to the literature of the effect of collective decision making, suggesting that no such effect occurs for TTO and SG.

Ambiguity preferences for health.

In most medical decisions, probabilities are ambiguous and not objectively known. Empirical evidence suggests that people's preferences are affected by ambiguity. Health economic analyses generally ignore ambiguity preferences and assume that they are the same as preferences under risk. We show how health preferences can be measured under ambiguity, and we compare them with health preferences under risk. We assume a general ambiguity model that includes many of the ambiguity models that have been proposed in the literature. For health gains, ambiguity preferences and risk preferences were indeed the same. For health losses, they differed with subjects being more pessimistic in decision under ambiguity. Utility and loss aversion were the same for risk and ambiguity. Our results imply that reducing the clinical ambiguity of health losses has more impact than reducing the ambiguity of health gains, that utilities elicited with known probabilities may not carry over to an ambiguous setting, and that ambiguity aversion may impact value of information analyses if losses are involved. These findings are highly relevant for medical decision making, because most medical interventions involve losses.

Discounting health and money: New evidence using a more robust method.

This study compares discounting for money and health in a field study. We applied the direct method, which measures discounting independent of utility, in a representative French sample, interviewed at home by professional interviewers. We found more discounting for money than for health. The median discount rates (6.5% for money and 2.2% for health) were close to market interest rates, suggesting that at the aggregate level the direct method solves the puzzle of unrealistically high discount rates typically observed in applied economics. Constant discounting fitted the data better than the hyperbolic discounting models that we considered. The substantial individual heterogeneity in discounting was correlated with age and occupation.

Treatment decisions under ambiguity.

Many health risks are ambiguous in the sense that reliable and credible information about these risks is unavailable. In health economics, ambiguity is usually handled through sensitivity analysis, which implicitly assumes that people are neutral towards ambiguity. However, empirical evidence suggests that people are averse to ambiguity and react strongly to it. This paper studies the effects of ambiguity aversion on two classical medical decision problems. If there is ambiguity regarding the diagnosis of a patient, ambiguity aversion increases the decision maker's propensity to opt for treatment. On the other hand, in the case of ambiguity regarding the effects of treatment, ambiguity aversion leads to a reduction in the propensity to choose treatment.

Capabilities as menus: a non-welfarist basis for QALY evaluation.

Quality-Adjusted Life Years (QALYs) are the most widely used measure of health in economic evaluations of health care. Within a welfarist framework QALYs are consistent with people's preferences under stringent assumptions. Several authors have argued that QALYs are a valid measure of health within an extra-welfarist framework. This paper studies the applicability of QALYs within the best-known extra-welfarist framework, Sen's capability approach. We propose a procedure to value capability sets and provide a foundation for QALYs within Sen's capability approach. We show that, under appropriate conditions, the ranking of capabilities can be represented locally by a QALY measure and that a willingness to pay for QALYs can be defined. The validity of QALYs as a general measure of health requires the same stringent conditions as in a welfarist framework.

A direct method for measuring discounting and QALYs more easily and reliably.

Time discounting and quality of life are two important factors in evaluations of medical interventions. The measurement of these two factors is complicated because they interact. Existing methods either simply assume one factor given, based on heuristic assumptions, or invoke complicating extraneous factors, such as risk, that generate extra biases. The authors introduce a method for measuring discounting (and then quality of life) that involves no extraneous factors and that avoids distorting interactions. Their method is considerably simpler and more realistic for subjects than existing methods. It is entirely choice based and thus can be founded on economic rationality requirements. An experiment demonstrates the feasibility of this method and its advantages over classical methods.

An experimental test of the concentration index.

The concentration index is widely used to measure income-related inequality in health. No insight exists, however, whether the concentration index connects with people's preferences about distributions of income and health and whether a reduction in the concentration index reflects an increase in social welfare. We explored this question by testing the central assumption underlying the concentration index and found that it was systematically violated. We also tested the validity of alternative health inequality measures that have been proposed in the literature. Our data showed that decreases in the spread of income and health were considered socially desirable, but decreases in the correlation between income and health not necessarily. Support for a condition implying that the inequality in the distribution of income and in the distribution of health can be considered separately was mixed.

How to aggregate health? Separability and the effect of framing.

BACKGROUND: Unweighted summation or quality-adjusted life year (QALY) utilitarianism is the most common way to aggregate health benefits in a cost-effectiveness analysis. A key qualitative principle underlying QALY utilitarianism is separability: those individuals unaffected by a policy choice should not influence the policy choice. Separability also underlies several of the alternatives for QALY utilitarianism that have been proposed. OBJECTIVES: To test separability and to test whether the support for separability is affected by the framing of the choice questions. METHODS: In 2 experiments, 345 student subjects (162 in the first experiment, and 183 in the second experiment) were asked to select 1 of 2 possible treatments, with each treatment resulting in a different distribution of health across individuals. The only aspect that varied across choice questions was the state of the patients whose health was unaffected by the act of choosing a policy. In each experiment, we used 2 frames. In the implicit frame, it was implied but not plainly expressed what outcomes the treatments had in common. In the explicit frame, common outcomes of the 2 treatments were directly stated. The 2 experiments differed in the way the explicit frame was presented (verbal v. numerical). RESULTS: The support for separability was significantly greater in the explicit frame. The proportion of violations in the implicit frame was 44% in Experiment 1 and 31% in Experiment 2, while in the explicit frame, the proportion of violations was 28% in Experiment 1 and 8% in Experiment 2. CONCLUSIONS: Framing affected the support for separability, raising issues as to whether it is possible to achieve a canonical representation of social choices.

Health utility bias: a systematic review and meta-analytic evaluation.

BACKGROUND: A common assertion is that rating scale (RS) values are lower than both standard gamble (SG) and time tradeoff (TTO) values. However, differences among these methods may be due to method specific bias. Although SG and TTOs suffer systematic bias, RS responses are known to depend on the range and frequency of other health states being evaluated. Over many diverse studies this effect is predicted to diminish. Thus, a systematic review and data synthesis of RS-TTO and RS-SG difference scores may better reveal persistent dissimilarities. PURPOSE: The purpose of this study was to establish through systematic review and meta-analysis the net effect of biases that endure over many studies of utilities. METHODS: A total of 2206 RS and TTO and 1318 RS and SG respondents in 27 studies of utilities participated. MEDLINE was searched for data from 1976 to 2004, complemented by a hand search of full-length articles and conference abstracts for 9 journals known to publish utility studies, as well as review of results and additional recommendations by 5 outside experts in the field. Two investigators abstracted the articles. We contacted the investigators of the original if required information was not available. RESULTS: No significant effect for RS and TTO difference scores was observed: effect size (95% confidence interval [CI]) = 0.04 (-0.02, 0.09). In contrast, RS scores were significantly lower than SG scores: effect size (95% CI ) =-0.23 (-0.28, -0.19). Correcting SG scores for 3 known biases (loss aversion, framing, and probability weighting) eliminated differences between RS and SG scores: effect size (95% CI ) = 0.01 (-0.03, 0.05). Systematic bias in the RS method may exist but be heretofore unknown. Bias correction formulas were applied to mean not individual utilities. CONCLUSIONS: The results of this study do not support the common view that RS values are lower than TTO values, may suggest that TTO biases largely cancel, and support the validity of formulas for correcting SG bias.

The predictive validity of prospect theory versus expected utility in health utility measurement.

Most health care evaluations today still assume expected utility even though the descriptive deficiencies of expected utility are well known. Prospect theory is the dominant descriptive alternative for expected utility. This paper tests whether prospect theory leads to better health evaluations than expected utility. The approach is purely descriptive: we explore how simple measurements together with prospect theory and expected utility predict choices and rankings between more complex stimuli. For decisions involving risk prospect theory is significantly more consistent with rankings and choices than expected utility. This conclusion no longer holds when we use prospect theory utilities and expected utilities to predict intertemporal decisions. The latter finding cautions against the common assumption in health economics that health state utilities are transferable across decision contexts. Our results suggest that the standard gamble and algorithms based on, should not be used to value health.

When are person tradeoffs valid?

The person tradeoff (PTO) is commonly used in health economic applications. However, to date it has no theoretical basis. The purpose of this paper is to provide this basis from a set of assumptions that together justify the most common applications of the PTO method. Our analysis identifies the central assumptions in PTO measurements. We test these assumptions in an experiment, but find only limited support for the validity of the PTO.

New evidence of preference reversals in health utility measurement.

A central assumption in health utility measurement is that preferences are invariant to the elicitation method used. This assumption is challenged by preference reversals. Previous studies have observed preference reversals between choice and matching tasks and between choice and ranking tasks. We present a preference reversal that is entirely derived from choices, the basic primitive of economics and utility theory. The preference reversal was observed in two studies regarding health states after stroke. Both studies involved large representative samples from the Spanish population, interviewed professionally, and face-to-face. Possible explanations for the preference reversal are the anticipation of disappointment and elation in risky choice and the impact of ethical considerations about the value of life.

Aversion to health inequalities and priority setting in health care.

Traditionally aversion to health inequality is modelled through a concave utility function over health outcomes. Bleichrodt et al. [Bleichrodt, H., Diecidue E., Quiggin J., 2004. Equity weights in the allocation of health care: the rank-dependent QALY model. Journal of Health Economics 23, 157-171] have suggested a "dual" approach based on the introduction of explicit equity weights. The purpose of this paper is to analyze how priorities in health care are determined in the framework of these two models. It turns out that policy implications are highly sensitive to the choice of the model that will represent aversion to health inequality.

New tests of QALYs when health varies over time.

This paper performs new tests of the QALY model when health varies over time. Our tests do not involve confounding assumptions and are robust to violations of expected utility. The results support the use of QALYs at the aggregate level, i.e. in economic evaluations of health care. At the individual level, there is less support for QALYs. The individual data are, however, largely consistent with a more general QALY-type model that remains tractable for applications.

A welfare economics foundation for health inequality measurement.

The empirical literature on the measurement of health inequalities is vast and rapidly expanding. To date, however, no foundation in welfare economics exists for the proposed measures of health inequality. This paper provides such a foundation for commonly used measures like the health concentration index, the Gini index, and the extended concentration index. Our results indicate that these measures require assumptions that appear restrictive. One way forward may be the development of multi-dimensional extensions.

Willingness to pay for reductions in health risks when probabilities are distorted.

We study the willingness to pay for reductions in health risks when people do not evaluate probabilities linearly, as is commonly assumed in elicitations of willingness to pay, but weight probabilities, as is commonly observed in empirical studies of decision under risk. We show that for the levels of baseline risk typically considered, probability weighting strongly affects willingness to pay estimates and may lead to unstable monetary valuations of health.

A nonparametric elicitation of the equity-efficiency trade-off in cost-utility analysis.

We performed an empirical elicitation of the equity-efficiency trade-off in cost-utility analysis using the rank-dependent quality-adjusted life-year (QALY) model, a model that includes as special cases many of the social welfare functions that have been proposed in the literature. Our elicitation method corrects for utility curvature and, therefore, our estimated equity weights are not affected by diminishing marginal utility. We observed a preference for equality in the allocation of health. The data suggest that the elicited equity weights were jointly determined by preferences for equality and by insensitivity to group size. A procedure is proposed to correct the equity weights for insensitivity to group size. Finally, we give an illustration how our method can be implemented in health policy.