Descriptive Validity of Alternative Intertemporal Models for Health Outcomes: An Axiomatic Test


van der Pol, M; Cairns, J; (2011) Descriptive Validity of Alternative Intertemporal Models for Health Outcomes: An Axiomatic Test. Health economics, 20 (7). pp. 770-782. ISSN 1057-9230 DOI: https://doi.org/10.1002/hec.1628

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Abstract

Intertemporal preferences for health are an important concept when modelling health-affecting behaviour and with respect to informing discounting practice in economic evaluation. The aim of this paper is to test robustly stationarity, the key axiom of the Discounted Utility model, and to test whether the quasi-hyperbolic or generalised hyperbolic model provides a better description of individual time preferences for health outcomes when stationarity is violated. Very little is known about the descriptive validity of the quasi-hyperbolic model. The different models can lead to different predictions and it is therefore crucial to test which functional form is more descriptively valid. An axiomatic approach is used. Intertemporal preferences were elicited from 203 university students. The results showed that stationarity is violated. Individuals discounted both initial delay and further delays between outcomes at a decreasing rate. This suggests that the quasi-hyperbolic model may not be appropriate to use in intertemporal analyses of health behaviour. Copyright (C) 2010 John Wiley & Sons, Ltd.

Item Type: Article
Keywords: intertemporal preferences, stationarity, hyperbolic discounting, health, DISCOUNTED UTILITY MODEL, TIME PREFERENCE, DECISION-MAKING, CHOICE, INCONSISTENCY, REVERSALS, RATES
Faculty and Department: Faculty of Public Health and Policy > Dept of Health Services Research and Policy
PubMed ID: 20540043
Web of Science ID: 289379800002
URI: http://researchonline.lshtm.ac.uk/id/eprint/833

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