Estimating implied rates of discount in healthcare decision-making

Abstract

Objectives: To consider whether implied rates of discounting from the perspectives of individual and society differ, and whether implied rates of discounting in health differ from those implied in choices involving finance or 'goods'. Design: The study comprised first a review of economics, health economics and social science literature and then an empirical estimate of implied rates of discounting in four fields: personal financial, personal health, public financial and public health, in representative samples of the public and of healthcare professionals. Setting and participants: Samples were drawn in the former county and health authority district of South Glamorgan, Wales. The public sample was a representative random sample of men and women, aged over 18 years and drawn from electoral registers. The health professional sample was drawn at random with the cooperation of professional leads to include doctors, nurses, professions allied to medicine, public health, planners and administrators. Results: The literature review revealed few empirical studies in representative samples of the population, few direct comparisons of public with private decision-making and few direct comparisons of health with financial discounting. Implied rates of discounting varied widely and studies suggested that discount rates are higher the smaller the value of the outcome and the shorter the period considered. The relationship between implied discount rates and personal attributes was mixed, possibly reflecting the limited nature of the samples. Although there were few direct comparisons, some studies found that individuals apply different rates of discount to social compared with private comparisons and health compared with financial. The present study also found a wide range of implied discount rates, with little systematic effect of age, gender, educational level or long-term Hlness. There was evidence, in both samples, that people chose a lower rate of discount in comparisons made on behalf of society than in comparisons made for themselves. Both public and health professional samples tended to choose lower discount rates in health-related comparisons than in finance-related comparisons. It was also suggested that implied rates of discount, derived from responses to hypothetical questions, can be influenced by detail of question framing. Conclusions: The study suggested that both the lay public and healthcare professionals consider that the discount rate appropriate for public decisions is lower than that for private decisions. This finding suggests that lay people as well as healthcare professionals, used to making decisions on behalf of others, recognise that society is not simply an aggregate of individuals. It also implies a general appreciation that society is more stable and has a more predictable future than does the individual. There is fairly general support for this view in the theoretical literature and limited support in the few previous direct comparisons. Further research is indicated, possibly involving more in-depth interviewing and drawing inference on real, rather than hypothetical choices.