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Tests of Utility Independence When Health Varies over Time

Author

Listed:
  • Anne Spencer

    (Queen Mary, University of London)

  • Angelo Ranaldo

    (University of East Anglia)

Abstract
In the conventional QALY model, people's preferences are assumed to satisfy utility independence. When health varies over time, utility independence implies that the value attached to a health state is independent of the health state that arise before or after it. In this paper we set out to test the extent to which utility independence is undermined by sequence and duration effects. Two separate studies were conducted involving a total of 155 respondents. In study one, we conducted 5 tests of utility independence using a standard gamble question. Three of the tests of utility independence were repeated in study two after randomisation was introduced in order to take account of possible ordering effects. Utility independence holds in the majority of cases examined here and so our work generally supports the use of utility independence to derive more tractable models.

Suggested Citation

  • Anne Spencer & Angelo Ranaldo, 2007. "Tests of Utility Independence When Health Varies over Time," Working Papers 596, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:596
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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2007/items/wp596.pdf
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Hougaard, Jens Leth & Moreno-Ternero, Juan D. & Østerdal, Lars Peter, 2013. "A new axiomatic approach to the evaluation of population health," Journal of Health Economics, Elsevier, vol. 32(3), pages 515-523.
    2. Attema, Arthur E. & Brouwer, Werner B.F., 2012. "A test of independence of discounting from quality of life," Journal of Health Economics, Elsevier, vol. 31(1), pages 22-34.
    3. Andrea C. Hupman & Jay Simon, 2023. "The Legacy of Peter Fishburn: Foundational Work and Lasting Impact," Decision Analysis, INFORMS, vol. 20(1), pages 1-15, March.

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    More about this item

    Keywords

    Utility independence; QALY;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I10 - Health, Education, and Welfare - - Health - - - General

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