QALYs Without Bias? Non-Parametric Correction of Time Trade-Off and Standard Gamble Weights Based on Prospect Theory

32 Pages Posted: 12 Oct 2017

See all articles by Stefan Lipman

Stefan Lipman

Erasmus School of Health Policy & Management

Werner Brouwer

Erasmus University Rotterdam (EUR) - Erasmus Medical Center (MC)

Arthur E. Attema

Erasmus University Rotterdam (EUR)

Date Written: July 11, 2017

Abstract

Common health state valuation methodologies, such as standard gamble (SG) and time trade-off (TTO), typically produce different weights for identical health states. We attempt to alleviate these differences by correcting for confounding influences that are modelled in prospect theory (PT): loss aversion and probability weighting. Furthermore, we correct for non-linear utility of life duration. In contrast to earlier attempts at correcting TTO and SG weights, we measure and correct for all these tenets simultaneously, using newly developed non-parametric methodology. These corrections were applied to three less-than-perfect health states, initially measured with TTO and SG. We found considerable loss aversion, and probability weighting for both gains and losses in life years. Furthermore, we find concave utility gains and convex utility for losses in life years. After correcting for these influences, the initially significant differences in weights between TTO and SG disappeared for all health states. Thus, our findings demonstrate the importance of accounting for biases in health state valuations.

Keywords: health state valuation, time trade-off, standard gamble, utility of life duration, loss aversion, QALY modelhealth state valuation, time trade-off, standard gamble, utility of life duration, loss aversion, QALY model

JEL Classification: B41, D03, D81, I10

Suggested Citation

Lipman, Stefan and Brouwer, Werner and Attema, Arthur E., QALYs Without Bias? Non-Parametric Correction of Time Trade-Off and Standard Gamble Weights Based on Prospect Theory (July 11, 2017). Available at SSRN: https://ssrn.com/abstract=3051140 or http://dx.doi.org/10.2139/ssrn.3051140

Stefan Lipman (Contact Author)

Erasmus School of Health Policy & Management ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Werner Brouwer

Erasmus University Rotterdam (EUR) - Erasmus Medical Center (MC) ( email )

Doctor Molewaterplein 40
Rotterdam, South Holland 3015 GD
Netherlands

Arthur E. Attema

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

HOME PAGE: http://https://sites.google.com/site/arthurattema/home

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
70
Abstract Views
553
rank
389,968
PlumX Metrics