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Discounting, Preferences, and Paternalism in Cost-Effectiveness Analysis
Linköping University, Department of Management and Engineering, Economics. Linköping University, Faculty of Arts and Sciences. Linköping University, Department of Medical and Health Sciences, Division of Health Care Analysis. Linköping University, Faculty of Health Sciences.ORCID iD: 0000-0002-8159-1249
2012 (English)In: Health Care Analysis, ISSN 1065-3058, E-ISSN 1573-3394, Vol. 20, no 3, 297-318 p.Article in journal (Refereed) Published
Abstract [en]

When assessing the cost effectiveness of health care programmes, health economists typically presume that distant events should be given less weight than present events. This article examines the moral reasonableness of arguments advanced for positive discounting in costeffectiveness analysis both from an intergenerational and an intrapersonal perspective and assesses if arguments are equally applicable to health and monetary outcomes. The article concludes that behavioral effects related to time preferences give little or no reason for why society at large should favour the present over the future when making intergenerational choices regarding health. The strongest argument for discounting stems from the combined argument of diminishing marginal utility in the presence of growth. However, this hinges on the assumption of actual growth in the relevant good. Moreover, current modern democracy may be insufficiently sensitive to the concerns of future generations. The second part of the article categorises preference failures (which justify paternalistic responses) into two distinct groups, myopic and acratic. The existence of these types of preference failures makes elicited time preferences of little normative relevance when making decisions regarding the social discount rate, even in an intrapersonal context. As with intergenerational discounting, the combined arguments of growth and diminishing marginal utility offer the strongest arguments for discounting in the intrapersonal context. However, there is no prima facie reason to assume that this argument should apply equally to health and monetary values. To be sure, selecting an approach towards discounting health is a complex matter. However, the life-ordeath implications of any approach require that the discussion not be downplayed to merely a technical matter for economists to settle.

Place, publisher, year, edition, pages
Springer, 2012. Vol. 20, no 3, 297-318 p.
Keyword [en]
Cost-effectiveness analysis; Discounting; Paternalism; Preference failures; Time preferences
National Category
Medical and Health Sciences Philosophy Medical Ethics Health Care Service and Management, Health Policy and Services and Health Economy Economics
URN: urn:nbn:se:liu:diva-65394DOI: 10.1007/s10728-011-0188-6ISI: 000306591400006OAI: diva2:395436
Available from: 2011-02-07 Created: 2011-02-07 Last updated: 2015-09-22
In thesis
1. The Art of Saying No: The Economics and Ethics of Healthcare Rationing
Open this publication in new window or tab >>The Art of Saying No: The Economics and Ethics of Healthcare Rationing
2011 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

It follows from resource scarcity that some form of healthcare rationing is unavoidable. This implies that potentially beneficial medical treatments must be denied to patients to avoid unacceptable sacrifices in other areas of society. By focusing on four, core, conceptual themes – individual responsibility, paternalism, incentives, and inequality – this thesis explores the matter of finding justifiable grounds for saying no in the context of health care.

By combining the perspectives of welfare economics and population-level ethics, the author explicate and discusses conflicting moral values involved in healthcare rationing. Four papers form the foundation for this thesis. Paper I articulates the potential role of individual responsibility as a welfarepromoting, rationing tool by exploring when healthcare services exhibit characteristics that facilitate individual responsibility for private financing. Paper II explores the normative relevance of individuals’ time preferences in healthcare rationing and when paternalism can be justified in the context of individuals’ intertemporal health choices. Paper III examines the compatibility between incentive-based organ donation and the ethical platform for setting priorities in Sweden. Paper IV empirically  investigates the existence of horizontal inequalities in using waiting lists to ration care.

From the discussion it is suggested, inter alia, that: I) Prospective responsibility as opposed to retrospective responsibility is a more productive notion of responsibility when discussing actual policies. However, potential positive effects need to be weighed against the increased economic inequality that it is likely to invoke. II) Although cost-effectiveness analysis provides valuable input when making rationing decisions it should not be viewed as a decision rule, since it is based on utilitarian values that constantly need to be balanced against other nonutilitarian values. III) Potentially, increased health could negatively affect individuals’ well-being if it creates opportunities that they are unable to take advantage of. This needs to be taken into account before embarking on paternalistic policies to improve health – policies that often target the lower socioeconomic segment.

The author concludes that decisions on rationing cannot be computed through a simple formula. Moreover, given that rationing is bound to be associated with reasonable disagreements we are unlikely to ever fully  resolve these disagreements. However, by explicitly stating conflicting moral values we are more likely to narrow the disagreements and achieve a healthcare system that is both fairer and more efficient.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2011. 91 p.
Linköping University Medical Dissertations, ISSN 0345-0082 ; 1215
National Category
Medical and Health Sciences
urn:nbn:se:liu:diva-65397 (URN)978-91-7393-282-0 (ISBN)
Public defence
2011-02-04, Berzeliussalen, ingång 64, plan 9, Campus US, Linköpings universitet, Linköping, 09:00 (Swedish)
Available from: 2011-02-07 Created: 2011-02-07 Last updated: 2015-09-22Bibliographically approved

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