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  • Cited by 10
  • Print publication year: 1995
  • Online publication date: December 2009

7 - Discounting health effects for medical decisions

Summary

The set of virtually unanswerable questions includes the discount rate used for future health status.

Lester Lave, The Strategy of Social Regulation

In any decision-making context in which effects of decisions are generated over time, it is necessary to establish some relative weight on deferred outcomes as opposed to immediate impacts. The task of converting future effects into present dollars by discounting them at some rate of interest is not a process unique to medical decision making. Indeed, all economic decisions in which resource allocations involve an intertemporal element entail some weighting of the effects at different points in time. The main economic question is what weight impacts should have at different times. In particular, how much more highly should current, as opposed to future, impacts be weighted?

Intertemporal aspects are inherent in the medical decision making context as well. The entire notion of investment in human health implies some concern with future well-being. Although strategies for treating headaches and the common cold involve remedies with imminent payoffs, most major medical decisions involve a long-run element (see, among others, Edelson, Tosteson, and Sax 1990; Weinstein and Stason 1977). The communicable nature of AIDS, for example, means potential future beneficiaries. Pharmaceutical products, such as those for treating hypertension and cancer, have long-run effects on future earnings and individual health that require some discounting process (Shibley et al. 1990; Kawachi and Malcolm 1991).