title: Discounting and decision making in the economic evaluation of health-care technologies.
abstract: Discounting costs and health benefits in cost-effectiveness analysis has been the subject of recent debate - some authors suggesting a common rate for both and others suggesting a lower rate for health. We show how these views turn on key judgments of fact and value: on whether the social objective is to maximise discounted health outcomes or the present consumption value of health; on whether the budget for health care is fixed; on the expected growth in the cost-effectiveness threshold; and on the expected growth in the consumption value of health. We demonstrate that if the budget for health care is fixed and decisions are based on incremental cost effectiveness ratios (ICERs), discounting costs and health gains at the same rate is correct only if the threshold remains constant. Expecting growth in the consumption value of health does not itself justify differential rates but implies a lower rate for both. However, whether one believes that the objective should be the maximisation of the present value of health or the present consumption value of health, adopting the social time preference rate for consumption as the discount rate for costs and health gains is valid only under strong and implausible assumptions about values and facts.
authors.affiliation: Centre for Health Economics, University of York, UK. kpc1@york.ac.uk
authors.forename: Karl
authors.initials: K
authors.lastname: Claxton
authors.forename: Mike
authors.initials: M
authors.lastname: Paulden
authors.forename: Hugh
authors.initials: H
authors.lastname: Gravelle
authors.forename: Werner
authors.initials: W
authors.lastname: Brouwer
authors.forename: Anthony J
authors.initials: AJ
authors.lastname: Culyer
mesh_terms: D026683:Advisory Committees; D020811:Biomedical Technology / Q000191:economics*; D002017:Budgets / Q000706:statistics & numerical data; D003362:Cost-Benefit Analysis; D003657:Decision Making; D003659:Decision Making, Organizational; D015233:Models, Statistical; D006113:United Kingdom