Person tradeoffs and the problem of risk

Abstract

Recently, the person tradeoff method has received much attention because it directs one to value health improvements of those other than one’s self. As a result, several researchers have suggested that the person tradeoff measures preferences in pharmaceutical and health economic analysis more accurately than the standard gamble, which many consider the gold standard approach. However, the person tradeoff exercise as it is currently practiced assumes a riskless world where policy decisions lead to certain societal outcomes. In reality, health policy decisions are made under risk or uncertainty. Evidence suggests riskless and risky values differ for health improvements over persons. A problem with using the riskless person tradeoff method in economic evaluation of health is that the method conflates a change in the objects of measurement (i.e., a change from health gains with respect to self to gains with respect to others) with a change in the measurement context (i.e., a change from a risk context to a risk-free one). Therefore, it is wise to examine what is sacrificed by ignoring risk and uncertainty inherent in health policy decision making. Given that the choices we make in the context of risk are often different than those we make under certainty, the authors argue that if one assumes context is important, the measurement of health improvements over persons should then be carried out in the context of risk. The authors propose the application of standard methods from utility theory to carry out elicitations for valuing health improvements of others within the context of risky choices. In addition, an alternative perspective of utility is discussed that in comparison puts forth a context free notion of utility.

Keywords::

• health economics
• health utility measurement
• person tradeoffs
• risk
• uncertainty