Abstract
This study compares discounting for money and health in a field study. We applied the direct method, which measures discounting independent of utility, in a representative French sample, interviewed at home by professional interviewers. We found more discounting for money than for health. The median discount rates (6.5% for money and 2.2% for health) were close to market interest rates, suggesting that at the aggregate level the direct method solves the puzzle of unrealistically high discount rates typically observed in applied economics. Constant discounting fitted the data better than the hyperbolic discounting models that we considered. The substantial individual heterogeneity in discounting was correlated with age and occupation.
Highlights
Many decisions undertaken will not have consequences until some point in the future
We have used Attema et al.’s (2016) direct method to investigate whether discounting for money and health are the same
The direct method measures discounting without requiring assumptions about utility
Summary
Many decisions undertaken will not have consequences until some point in the future. The rate at which future consequences are devalued is called the discount rate. An important question for both research and policy is whether discount rates depend on the outcome domain. Most research on discounting has used monetary outcomes and it would be very useful if the results from this rich literature could be used to inform preferences in other domains. Government policy typically uses the same discount rate across domains. The National Institute of Clinical Excellence (NICE), which guides health policy in the UK, discounts the costs and benefits of medical interventions at the same rate (3.5%). The theoretical rationale for using the same discount rate for health and money is questionable (Claxton et al 2011). Similar questions arise regarding the discounting of other non-monetary consequences like environmental goods
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
