Paper #676

Title:

A consistency test of the time trade-off

Authors:

Han Bleichrodt, José Luis Pinto and José María Abellán-Perpiñán

Date:

March 2003

Abstract:

This paper tests the internal consistency of time trade-off utilities. We find significant violations of consistency in the direction predicted by loss aversion. The violations disappear for higher gauge durations. We show that loss aversion can also explain that for short gauge durations time trade-off utilities exceed standard gamble utilities. Our results suggest that time trade-off measurements that use relatively short gauge durations, like the widely used EuroQol algorithm (Dolan 1997), are affected by loss aversion and lead to utilities that are too high.

Keywords:

Cost-Utility Analysis, Time Trade-Off, Loss Aversion

JEL codes:

I10

Area of Research:

Labour, Public, Development and Health Economics

CRES Series number:

28

Published in:

Journal of Health Economics, 2003, vol. 22, issue 6, pp. 1037-1052

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