Risk-risk versus standard gamble procedures for measuring health state utilities

Title: Risk-risk versus standard gamble procedures for measuring health state utilitiesAuthors: Dolan, Paul and Jones-Lee, Michael and Loomes, G.Publisher: Applied economics, 27 (11). pp. 1103-1111ISSN: 0003-6846View Publication

Abstract: Contingent valuation (CV) has been widely used to measure the potential benefits derived from different policy decisions. However, doubt now exists about the validity of the CV method and alternative approaches to benefit valuation have been proposed. The paper reports on the results of a study which was designed to test the viability of two of the most prominent of the alternatives: the risk-risk (RR) and standard gamble (SG) approaches. If individual preferences are consistent with the axioms of von Neumann-Morgenstern expected utility theory (EUT) then the two methods should generate the same interval scales for any given set of health states. However, the results show that SG utilities are substantially higher than RR ones, thus casting doubt on these axioms. The paper discusses alternatives to EUT which might better expalin the discrepancies found. It also considers whether the results might be explained in terms of status-quo bias and/or by the relative difficulty of RR questions. The results presented may have important implications for other areas of applied research in which there exists uncertainty about outcomes.