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The Economic Evaluation of Health

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Fondation Brocher
Fondation Brocher

This document outlines Dan Hausman's critique of economic evaluations of health that rely on eliciting and aggregating individual preferences. Hausman argues that preferences are an unreliable guide to the value of health states for several reasons. People's preferences can be distorted by cognitive flaws and irrelevant factors. They are also often uninformed since health states are unfamiliar alternatives. Rather than relying on preferences, Hausman believes health economists should directly evaluate health states based on their effects on well-being, opportunities, autonomy, and other considerations.

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DEPARTMENT OF PHILOSOPHY The Economic Evaluation of Health (Mostly not about GBD) Dan Hausman Department of Philosophy University of Wisconsin-Madison
DEPARTMENT OF PHILOSOPHY Outline 1. Economic evaluations 2. What is different about health? 3. Preferences and their elicitation 4. Against valuing by preferences 5. Against “the social choice model” 6. Conclusions 2
DEPARTMENT OF PHILOSOPHY 1. Economic evaluation • The task: valuing health (health states) • Assume that individual rankings of health states satisfy various formal conditions • Derive social value from individual values • Examples: – Social choice theory (& social welfare functions) – Cost-benefit analysis – Non-welfarist possible alternatives 3
DEPARTMENT OF PHILOSOPHY 2. Problems in valuing health 4 • Ordinal rankings not sufficient • Willingness to pay (coupled with aggregation as “net benefit”), a morally unacceptable measure • Health states are unfamiliar alternatives • Fragility of rankings • Systematic divergences
DEPARTMENT OF PHILOSOPHY 3. Preference elicitation Preferences are total comparative evaluations. Four methods of eliciting: 1.Visual analogue scale (VAS) –Does it yield cardinal values? 5
DEPARTMENT OF PHILOSOPHY 2 Standard gamble – Intellectually challenging – For p < 1, respondents refuse standard gambles to alleviate minor health conditions 3 Time trade-off – People refuse trade-offs to alleviate minor ailments 4 Person trade-off – PTO1 (1000 healthy vs. n disabled) morally dubious – Mixes issues of fairness and value Multiplicative intransitivity 6
DEPARTMENT OF PHILOSOPHY 4. Against valuing by preferences a. Problems with population surveys 1. Questions are not well-defined. 2. Respondents do not take questions seriously. 3. Questions are too difficult. 4. Respondents do not have relevant information. 5. Respondents are subject to cognitive flaws. 7
DEPARTMENT OF PHILOSOPHY 4. Against valuing by preferences b. When do preferences reveal values? 1. Relevant beliefs are true 2. Preferences satisfy axioms and are not distorted by cognitive flaws 3. Individuals are competent evaluators 4. In addition, to reflect well-being, preferences must be “self-directed” 8
DEPARTMENT OF PHILOSOPHY Against valuing by preferences c. Whose preferences? 1. A representative sample of the target population vs. 2. Those with detailed knowledge of the health state 1. Caregivers? 2. Those occupying the health state? 3. Averaging? 9
DEPARTMENT OF PHILOSOPHY Measure Current patients Former patients Community TTO utility (0-1)* .84 .64 .63 Life satisfaction (1-7) 4.13 4.46 4.21 Quality of life (0-100) 67.60 71.32 72.60 Current health (0-100) 62.51 63.57 69.81 Positive mood (1-5) 3.15 3.06 Negative mood (1-5) 1.82 1.88 10 Current patients are indifferent between living 10 yrs with a colostomy and 8.4 yrs In full health – they are willing to sacrifice 1.6 yrs to be rid of the colostomy. Former patients and the community are willing to trade-off 3.6 or 3.7 years. Smith, Sherriff, Damschroder, Lowewenstein, and Ubel 2006
DEPARTMENT OF PHILOSOPHY Against valuing by preferences d. Preferences vs. other rankings Rankings of health states 1. By their bearing on well-being (Broome, Brock) 2. By the burden they impose on others 3. By their effects on opportunities (Daniels) 4. By their level of subjective distress (Dolan) 5. By their effects on autonomy 6. By their economic consequences 7. By preferences Why rely on preference rankings? 11
DEPARTMENT OF PHILOSOPHY Arguments for relying on preferences 1. Those affected should decide 2. Implied by popular sovereignty 3. Needed to avoid paternalism 4. Needed for legitimacy 5. Preference satisfaction = well-being 6. There is no feasible alternative 12
DEPARTMENT OF PHILOSOPHY 5 Against the social choice model Individual (preference) rankings result from individual evaluations of health states Social evaluation derives from individual evaluations (no questions asked) . . .But 1.How do individuals evaluate health states? What do their evaluations rely on? 2.How should individuals evaluate health states? 3.Why can’t health economists evaluate health states for themselves? 13
DEPARTMENT OF PHILOSOPHY Conclusions Economic evaluation relies on eliciting and aggregating preferences •Prefs. = total comparative evaluations •Preferences are unreliable guides to the value of health states – Depend on some irrelevant factors – Often uninformed, cognitively flawed Economic evaluation evades the challenge of evaluating health states 14

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The Economic Evaluation of Health

  • 1. DEPARTMENT OF PHILOSOPHY The Economic Evaluation of Health (Mostly not about GBD) Dan Hausman Department of Philosophy University of Wisconsin-Madison
  • 2. DEPARTMENT OF PHILOSOPHY Outline 1. Economic evaluations 2. What is different about health? 3. Preferences and their elicitation 4. Against valuing by preferences 5. Against “the social choice model” 6. Conclusions 2
  • 3. DEPARTMENT OF PHILOSOPHY 1. Economic evaluation • The task: valuing health (health states) • Assume that individual rankings of health states satisfy various formal conditions • Derive social value from individual values • Examples: – Social choice theory (& social welfare functions) – Cost-benefit analysis – Non-welfarist possible alternatives 3
  • 4. DEPARTMENT OF PHILOSOPHY 2. Problems in valuing health 4 • Ordinal rankings not sufficient • Willingness to pay (coupled with aggregation as “net benefit”), a morally unacceptable measure • Health states are unfamiliar alternatives • Fragility of rankings • Systematic divergences
  • 5. DEPARTMENT OF PHILOSOPHY 3. Preference elicitation Preferences are total comparative evaluations. Four methods of eliciting: 1.Visual analogue scale (VAS) –Does it yield cardinal values? 5
  • 6. DEPARTMENT OF PHILOSOPHY 2 Standard gamble – Intellectually challenging – For p < 1, respondents refuse standard gambles to alleviate minor health conditions 3 Time trade-off – People refuse trade-offs to alleviate minor ailments 4 Person trade-off – PTO1 (1000 healthy vs. n disabled) morally dubious – Mixes issues of fairness and value Multiplicative intransitivity 6
  • 7. DEPARTMENT OF PHILOSOPHY 4. Against valuing by preferences a. Problems with population surveys 1. Questions are not well-defined. 2. Respondents do not take questions seriously. 3. Questions are too difficult. 4. Respondents do not have relevant information. 5. Respondents are subject to cognitive flaws. 7
  • 8. DEPARTMENT OF PHILOSOPHY 4. Against valuing by preferences b. When do preferences reveal values? 1. Relevant beliefs are true 2. Preferences satisfy axioms and are not distorted by cognitive flaws 3. Individuals are competent evaluators 4. In addition, to reflect well-being, preferences must be “self-directed” 8
  • 9. DEPARTMENT OF PHILOSOPHY Against valuing by preferences c. Whose preferences? 1. A representative sample of the target population vs. 2. Those with detailed knowledge of the health state 1. Caregivers? 2. Those occupying the health state? 3. Averaging? 9
  • 10. DEPARTMENT OF PHILOSOPHY Measure Current patients Former patients Community TTO utility (0-1)* .84 .64 .63 Life satisfaction (1-7) 4.13 4.46 4.21 Quality of life (0-100) 67.60 71.32 72.60 Current health (0-100) 62.51 63.57 69.81 Positive mood (1-5) 3.15 3.06 Negative mood (1-5) 1.82 1.88 10 Current patients are indifferent between living 10 yrs with a colostomy and 8.4 yrs In full health – they are willing to sacrifice 1.6 yrs to be rid of the colostomy. Former patients and the community are willing to trade-off 3.6 or 3.7 years. Smith, Sherriff, Damschroder, Lowewenstein, and Ubel 2006
  • 11. DEPARTMENT OF PHILOSOPHY Against valuing by preferences d. Preferences vs. other rankings Rankings of health states 1. By their bearing on well-being (Broome, Brock) 2. By the burden they impose on others 3. By their effects on opportunities (Daniels) 4. By their level of subjective distress (Dolan) 5. By their effects on autonomy 6. By their economic consequences 7. By preferences Why rely on preference rankings? 11
  • 12. DEPARTMENT OF PHILOSOPHY Arguments for relying on preferences 1. Those affected should decide 2. Implied by popular sovereignty 3. Needed to avoid paternalism 4. Needed for legitimacy 5. Preference satisfaction = well-being 6. There is no feasible alternative 12
  • 13. DEPARTMENT OF PHILOSOPHY 5 Against the social choice model Individual (preference) rankings result from individual evaluations of health states Social evaluation derives from individual evaluations (no questions asked) . . .But 1.How do individuals evaluate health states? What do their evaluations rely on? 2.How should individuals evaluate health states? 3.Why can’t health economists evaluate health states for themselves? 13
  • 14. DEPARTMENT OF PHILOSOPHY Conclusions Economic evaluation relies on eliciting and aggregating preferences •Prefs. = total comparative evaluations •Preferences are unreliable guides to the value of health states – Depend on some irrelevant factors – Often uninformed, cognitively flawed Economic evaluation evades the challenge of evaluating health states 14

Editor's Notes

  1. This assumes that one is evaluating rather than measuring health. In practice, welfare economics attempts to infer values from choices. Theoretical work on social choice and social welfare functions typically says little about how to measure Individual preferences or utilities.
  2. Notice that the ends are best and worst health states, not health state you most prefer or least prefer.
  3. EQ5D as an example. People in effect asked for their preferences between “moderate” pain and “moderate” depression. Both are ranges. People do not ask for further clarification and they answer immediately. Discuss the “focusing illusion” and failure to appreciate adaptation
  4. Colostomies