Unbiased Analysis of Today's Healthcare Issues
Prospect theory states that individuals view transactions relative to a fixed reference point. Individuals are risk averse for gains (i.e., they would prefer $10 for sure over a 50/50 of winning $0 or $20) but risk loving over losses (i.e., they would prefer a 50/50 ‘lottery’ of losing $0 or $20 over a sure loss of $10.…
In a previous post in 2014, I examined a systematic literature review of individual willingness to pay for an extra life year. That study found that individuals were willing to pay 118,839 EUR 2010 on average (equivalent to $142,762.92 USD in 2015 USD). The median WTP however, is only 24,226 EUR (or $29,100 in 2015 USD).…
Would you rather live for 5 years in perfect health or 10 years with some debilitating disease? How much do you value living for a year with this debilitating disease compared to a year in full health? These questions may seem like ones from philosophy, but they are ones that health economics ask all the time. The…
How much would you pay to live longer? Most people would say an infinite amount. In practice, however, this is not the case. For instance, you can drive slower to reduce your risk of a car crash. In this case, you trade off your time with your probability of death. Or, to continue the care…
One concept often used in healthcare is the quality-adjusted life years (QALY). The concept is fairly simple. It assumes that people value one year of life in perfect health at 1; people who die have a value of a life year of 0. One year of life where you have 50% health is then valued…
Health Economists often use the cost per quality-adjusted life year (QALY) metric to answer this question. QALYs are used to measure not only the additional years of life from a treatment, but also the quality of life. For instance, you may prefer to live 1 year in perfect health to two years in a coma.…
Health economists, policy makers, physicians and public health officials all want to maximize the well-being of society. These groups evaluate different medical treatments or public health interventions and then determine if the benefit is worth the cost. In an opinion piece by Dorte Gyrd-Hansen in Pharmacoeconomics (2005), two schools of thought are examined. Those who…