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The Economics of Measuring Quality of Life by the Standard Gamble Method

Eisenstat, Eric, Epure, Manuela and Gray, Paddy (2011) The Economics of Measuring Quality of Life by the Standard Gamble Method. Annals of Spiru Haret University, 2 (11) (1). pp. 81-100. [Journal article]

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URL: http://anale-economie.spiruharet.ro/en/archive/archive-2011/vol-211_issue-1/

Abstract

Of the countless methods for measuring the quality of life (QOL) that have been proposed and analysed by the vast multi-disciplinary literature over the past decades, only a select few are alluded to in Romanian scientific circles, and even fewer are actually implemented in practical applications. In adapting existing techniques and engineering a variable measurement system specific to Romania, there exists an important opportunity to re-evaluate the merits and shortcomings of established approaches. As a specific example, we consider the Standard Gamble (SG) method of eliciting 'subjective utilities' related to particular health states. The re-evaluation is accomplished from three perspectives: theoretic consistency, interpretability and practicality. It is demonstrated that consistent withe economic theory, the appropriate interpretation of SG derived measures is that of a Hicksian change in welfare valuation, rather than a cardinal measure of preferences. A practical consequence of teh latter is that SG will necessarily produce a higher QOL value for individuals exhibiting more risk aversion. This leads to contemplate that in fact SG may be a more appropriate methodology in other contexts, nat necessarily health-related, where quality of life may indeed be correlated with the willingness to take risks.

Item Type:Journal article
Keywords:Quality of life. measurement, cost-effectiveness analysis, von Neumann-Morgenstern utilities, Romanian well-being index
Faculties and Schools:Faculty of Art, Design and the Built Environment
Faculty of Art, Design and the Built Environment > School of the Built Environment
Research Institutes and Groups:Built Environment Research Institute > Centre for Research on Property and Planning (RPP)
Built Environment Research Institute
ID Code:31808
Deposited By: Professor Paddy Gray
Deposited On:06 Jul 2015 15:19
Last Modified:06 Jul 2015 15:19

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