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The time trade-off: a note on lifetime reallocation of consumption and discounting

Dolan, Paul and Jones-Lee, Michael (1997) The time trade-off: a note on lifetime reallocation of consumption and discounting. Journal of Health Economics, 16 (6). pp. 731-739. ISSN 0167-6296

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Abstract

This paper considers the extent to which responses to time trade-off (TTO) questions can provide unbiased estimates of ratios of individual marginal rates of substitution (MRS) of wealth for risk of various health state impairments relative to the corresponding MRS for risk of death. It is shown that if there is reallocation of lifetime consumption and/or discounting of future utilities, then a TTO response that is not adjusted for these effects will unambiguously overestimate the ratios of individual MRS. While the effect of reallocation is likely to be very small, discounting can lead to significant overestimation, the magnitude of which depends in part upon the severity of the health state impairment.

Item Type: Article
Official URL: http://www.elsevier.com/wps/find/journaldescriptio...
Additional Information: © 1997 Elsevier Science B.V.
Library of Congress subject classification: R Medicine > R Medicine (General)
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
Sets: Departments > Social Policy
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 03 Mar 2011 17:02
URL: http://eprints.lse.ac.uk/33048/

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