Discounting, Preferences, and Paternalism in Cost-Effectiveness Analysis
- Gustav Tinghög
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When assessing the cost effectiveness of health care programmes, health economists typically presume that distant events should be given less weight than present events. This article examines the moral reasonableness of arguments advanced for positive discounting in cost-effectiveness analysis both from an intergenerational and an intrapersonal perspective and assesses if arguments are equally applicable to health and monetary outcomes. The article concludes that behavioral effects related to time preferences give little or no reason for why society at large should favour the present over the future when making intergenerational choices regarding health. The strongest argument for discounting stems from the combined argument of diminishing marginal utility in the presence of growth. However, this hinges on the assumption of actual growth in the relevant good. Moreover, current modern democracy may be insufficiently sensitive to the concerns of future generations. The second part of the article categorises preference failures (which justify paternalistic responses) into two distinct groups, myopic and acratic. The existence of these types of preference failures makes elicited time preferences of little normative relevance when making decisions regarding the social discount rate, even in an intrapersonal context. As with intergenerational discounting, the combined arguments of growth and diminishing marginal utility offer the strongest arguments for discounting in the intrapersonal context. However, there is no prima facie reason to assume that this argument should apply equally to health and monetary values. To be sure, selecting an approach towards discounting health is a complex matter. However, the life-or-death implications of any approach require that the discussion not be downplayed to merely a technical matter for economists to settle.
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- Discounting, Preferences, and Paternalism in Cost-Effectiveness Analysis
Health Care Analysis
Volume 20, Issue 3 , pp 297-318
- Cover Date
- Print ISSN
- Online ISSN
- Springer US
- Additional Links
- Cost-effectiveness analysis
- Preference failures
- Time preferences
- Gustav Tinghög (1) (2)
- Author Affiliations
- 1. Department of Management and Engineering, Division of Economics, Linköping University, 581 83, Linköping, Sweden
- 2. Department of Medical and Health Sciences, Division of Health Care Analysis, Linköping University, Linköping, Sweden