Comparing Increments in Utility of Health: An Individual-based Approach.

Abstract

Many economic evaluations of health care changes rely on quality-adjusted life year (QALY) estimates. Notably, though, the QALY approach values health states rather than changes in health states. Hence, a gain in utility of health is only indirectly valued through an ex ante preference elicitation of health states and the subsequent subtraction of health state values from one another, rather than being valued directly. There is therefore an underlying assumption that individuals, from an ex ante perspective ceteris paribus, would be indifferent between equal utility increments from health states with different baseline utilities. The aim of this paper is to develop a method that would allow us to measure individual-based preferences over utility increments from different baselines. We elicit our data using face-to-face interviews on a sample of UK individuals. Overall, we find that gains of "equal" utility increments from different baselines are not found to be equally preferable by the individual. The results indicate that the subtraction approach could lead to sub-optimal resource allocations and suggest that a new approach which values health changes directly would better reflect individual preferences. This paper provides the foundations for a method to achieve this.