QALYs Without Bias? Non-Parametric Correction of Time Trade-Off and Standard Gamble Weights Based on Prospect Theory
32 Pages Posted: 12 Oct 2017
Date Written: July 11, 2017
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
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