Getting used to it: the adaptive global utility model

Title: Getting used to it: the adaptive global utility model
Authors: Bradford, W. David and Dolan, Paul
Publisher: Journal of health economics, 29 (6). pp. 811-820
ISSN: 0167-6296
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Abstract: This paper expands the standard model of utility maximization to endogenize the ubiquitous phenomenon of adaptation. We assume that total utility is an aggregate function of the utility associated with different domains of life, with relative weights that are optimized according to the effort that the individual expends on producing utility in each domain. Comparative statics from the general maximization problem demonstrate that the traditional Slutsky equation should incorporate an additional response term to account for adaptation processes. Our adaptive global utility maximization model can be used to explain responses to changes in health.

Thinking about it: thoughts about health and valuing QALYs

Title: Thinking about it: thoughts about health and valuing QALYs
Authors: Dolan, Paul
Publisher: Health economics
ISSN: 1057-9230
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Abstract: When valuing health states (e.g. for use in the assessment of health technologies), health economists often ask respondents how many years of life in poor health they would be willing to trade-off in order to live in full health. Problems with preferences of this kind have led to calls for the use of more direct measures of the utility associated with experiencing a health state. The fact remains, however, that individuals are often willing to make large sacrifices in life expectancy to alleviate conditions for which there appears to be a considerable degree of hedonic adaptation. The purpose of this study is to investigate this important discrepancy in more detail. Data from 1173 internet and telephone surveys in the United States suggest that time trade-off responses are related to the frequency and intensity of negative thoughts about health in ways that may not be very well captured by any of the proposed valuation methods.

‘Oops…I did it again’: repeated focusing effects in reports of happiness

Title: ‘Oops…I did it again’: repeated focusing effects in reports of happiness
Authors: Dolan, Paul and Metcalfe, Robert
Publisher: Journal of economic psychology, 31 (4). pp. 732-737
ISSN: 0167-4870
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Abstract: We use an experiment (relating to a major European soccer match) to replicate previous studies that show forecasts of the impact of an event on happiness are often greatly exaggerated. In addition, by randomising respondents into one of two groups (assessing happiness before and after the event or only after), we are also able to show that previously focusing on an event can affect subsequent happiness responses. From a final sample of 309 soccer fans contacted via a social networking site, the happiness ratings of the fans of the losing team who answered before and after the soccer match is a whole point lower (on a 0–10 scale) than similar fans who rated their happiness only after the event. The potential spillover of a focusing effect from one survey to the next has important implications for how we interpret happiness responses from longitudinal surveys.

Determining the parameters in social welfare function using stated preference data: an application to health

Title: Determining the parameters in social welfare function using stated preference data: an application to health
Authors: Dolan, Paul and Tsuchiya , Aki
Publisher: Applied economics, pp. 1466-4283
ISSN: 0003-6846
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Abstract: One way in which economists might determine how best to balance the competing objectives of efficiency and equity is to specify a social welfare function (SWF). This paper looks at how the stated preferences of a sample of the general public can be used to estimate the shape of the SWF in the domain of health benefits. The results suggest that it is possible to determine the parameters in a social welfare function from stated preference data, but show that people are sensitive to what inequalities exist and to the groups across which those inequalities exist.