Discounting Health and Cost-Effectiveness Analysis : a response to Nord

Hammitt, James K. (2012) Discounting Health and Cost-Effectiveness Analysis : a response to Nord. Health Economics, 21 (7). pp. 878-882.

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Official URL: http://tse-fr.eu/pub/25658

Abstract

Nord (2011) criticizes standard arguments which assert that consistency requires that future health benefits must be
discounted at the same rate as future costs in cost-effectiveness analysis (CEA). He suggests these arguments are misguided
because they require transitivity of preferences across decision contexts and that it can be appropriate to discount health at
different rates depending on the programs to be compared. I claim that rejecting transitivity is unwarranted and would
sharply diminish the utility of CEA. Factors that tempt Nord to reject consistency can be accommodated by recognizing
that CEA does not perfectly mimic normative social preferences because it omits factors (like distribution of health in a
population) that can be normatively significant. A better approach is to maintain consistency in application of CEA but
authorize decision makers to depart from rankings implied by CEA when justified and to explain which specific factors
justify the decision. Finally, the assertion that health must be discounted at the same rate as costs requires the additional
assumption that the dollar value of health does not change over time, a point that is not always recognized in standard
arguments.

Item Type: Article
Language: English
Date: July 2012
Refereed: Yes
Uncontrolled Keywords: cost-effectiveness analysis, discount rate
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:23
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:25658
URI: http://publications.ut-capitole.fr/id/eprint/15226

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