Valuing the future: temporal discounting of health and money

A conceptually based approach to understanding chronically ill patients' responses to medication cost pressures

Prescription medications enhance the well-being of most chronically ill patients. Many individuals, however, struggle with how to pay for their treatments and as a result experience problems with self-care and health maintenance. Although studies have documented that high out-of-pocket costs are associated with medication non-adherence, little research on prescription cost sharing has been theoretically grounded in knowledge of the more general determinants of patients' self-management behaviors and chronic disease outcomes. We present a conceptual framework for understanding the influence of patient, medication, clinician, and health system factors on individuals' responses to medication costs. We review what is known about how these factors influence medication adherence, identify possible strategies through which clinicians, health systems, and policy-makers may assist patients burdened by their medication costs, and highlight areas in need of further research. Although medication costs represent a burden to chronically ill patients worldwide, most patients report using their medication as prescribed despite the costs, and others report cost-related underuse despite an apparent ability to afford those treatments. The cost-adherence relationship is modified by contextual factors, including patients' characteristics (e.g., age, ethnicity, and attitudes toward medications), the type of medications they are using (e.g., the complexity of dosing and the drug's clinical target), clinician factors (e.g., choice of first-line agent and communication about medication costs), and health system factors (e.g., efforts to influence clinicians' prescribing and to help patients apply for financial assistance programs). Understanding these relationships will enable clinicians and policy-makers to better design pharmacy benefits and assist patients in taking their medication as prescribed. The next generation of studies examining the consequences of prescription drug costs should expand our knowledge of the ways in which these co-factors influence patients' responses to medication cost pressures.

Simulation of Begin and End Ages for Mammography Screening

This article is designed to assist healthcare professionals in identifying begin and end ages for annual breast cancer mammography screening through the use of cost-effectiveness and computer modeling. With a limit of acceptability of $50,000 per life-year saved, the ages of screening were found to be 35 to 85. The present study identifies the end age for screening more clearly than currently available evidence while meeting the societal limits of $50,000 per life-year saved and equitable spending for the young and old alike.

Societal discounting of health effects in cost-effectiveness analyses: the influence of life expectancy

BACKGROUND

Increasing life expectancy and decreasing marginal valuation of additional QALYs over time may serve as a basis for discounting future health effects from a societal perspective. Therefore, we tested the hypothesis that societal time preference for health is related to perceived future life expectancy.

METHODS

A sample of 223 people from the general population prioritised healthcare programmes with differential timing of health benefits and costs from a societal perspective. Furthermore, we asked respondents to estimate future life expectancy.

RESULTS

The relationship between future life expectancy and time preference for health is ambiguous. We observed that people who expected a higher future life expectancy elicited higher discount rates for health effects than those with lower life expectancy growth expectations for all four time periods (5, 10, 20 and 40 years into the future), but the differences were never significant. On average, providing explicit information on growth in life expectancy did significantly alter discount rates in the expected direction but, on an individual level, the results were rather inconsistent. We observed a significantly stronger time preference (i.e. higher discount rates) for health effects than for costs. As commonly observed, discount rates for health and money decreased with time delay following a hyperbolic function.

CONCLUSION

Our data indicate that it is troublesome to elicit societal discount rates empirically, especially rates that are in line with the theoretical arguments on societal discounting. The influence of life expectancy remains ambiguous, but there seems to be at least some positive relationship between growth in life expectancy and discount rates that deserves additional attention.

Deadline Rush: A Time Management Phenomenon and Its Mathematical Description Relationships Between Critical Thinking and Attitudes Toward Women's Roles in Society

A typical time management phenomenon is the rush before a deadline. Behavioral decision making research can be used to predict how behavior changes before a deadline. People are likely not to work on a project with a deadline in the far future because they generally discount future outcomes. Only when the deadline is close are people likely to work. On the basis of recent intertemporal choice experiments, the authors argue that a hyperbolic function should provide a more accurate description of the deadline rush than an exponential function predicted by an economic model of discounted utility. To show this, the fit of the hyperbolic and the exponential function were compared with data sets that describe when students study for exams. As predicted, the hyperbolic function fit the data significantly better than the exponential function. The implication for time management decisions is that they are most likely to be inconsistent over time (i.e., people make a plan how to use their time but do not follow it).

A discounting framework for choice with delayed and probabilistic rewards

When choosing between delayed or uncertain outcomes, individuals discount the value of such outcomes on the basis of the expected time to or the likelihood of their occurrence. In an integrative review of the expanding experimental literature on discounting, the authors show that although the same form of hyperbola-like function describes discounting of both delayed and probabilistic outcomes, a variety of recent findings are inconsistent with a single-process account. The authors also review studies that compare discounting in different populations and discuss the theoretical and practical implications of the findings. The present effort illustrates the value of studying choice involving both delayed and probabilistic outcomes within a general discounting framework that uses similar experimental procedures and a common analytical approach.

Discounting of delayed food rewards in pigeons and rats: is there a magnitude effect?

Temporal discounting refers to the decrease in the present, subjective value of a reward as the time to its receipt increases. Results from humans have shown that a hyperbola-like function describes the form of the discounting function when choices involve hypothetical monetary rewards. In addition, magnitude effects have been reported in which smaller reward amounts are discounted more steeply than larger amounts. The present research examines the cross-species generality of these findings using real rewards, namely food pellets, with both pigeons and rats. As with humans, an adjusting amount procedure was used to estimate the amount of immediate reward judged equal in value to a delayed reward. Different amounts of delayed food rewards (ranging from 5 to 32 pellets in pigeons and from 5 to 20 pellets in rats) were studied at delays varying from 1 s to 32 s. A simple hyperbola, similar to the hyperbola-like mathematical function that describes the discounting of hypothetical monetary rewards in humans, described the discounting of food rewards in both pigeons and rats. These results extend the generality of the mathematical model of discounting. Rates of discounting delayed food rewards were higher for pigeons than for rats. Unlike humans, however, neither pigeons nor rats showed a reliable magnitude effect: Rate of discounting did not vary systematically as a function of the amount of the delayed reward.

The economic implications of non-adherence after renal transplantation

BACKGROUND

The economic impact of therapeutic non-adherence in chronic diseases has rarely been examined using qualitative standards for economic evaluation. This study illustrates the impact of non-adherence on the cost utility of renal transplantation versus haemodialysis from the societal perspective and examines the scope for adherence-enhancing interventions.

METHODS

Long-term costs and outcomes in adherent and non-adherent renal transplant patients were simulated in a Markov model. The cost (euros, year 2000 values) and outcome data that were imputed in the model were derived from a prospective study in renal transplantation candidates performed in 2002. Probabilities of adverse events, graft rejection, graft loss and death in adherent and non-adherent renal transplant patients were derived from literature.

RESULTS

Compared with dialysis, renal transplantation offers a better outcome in both adherent and non-adherent patients. Lifetime costs after transplantation in the adherent patient group are higher than lifetime dialysis costs and lifetime costs in the non-adherent patient group, mainly because adherent patients live longer after transplantation. Long-term outcomes after transplantation are better for adherent than for non-adherent patients. The mean cost per QALY gained in adherent patients relative to non-adherent patients was euro 35 021 per QALY (95% CI 26 959, 46 620).

CONCLUSION

Compared with established healthcare interventions, such as haemodialysis, renal transplantation can be considered a cost-effective therapy for patients with end-stage renal disease, even if patients are non-adherent after transplantation. The low incremental cost per QALY calculated in this model for adherent renal transplant patients, suggests there may be scope for adherence-enhancing interventions (provided that such interventions with a sufficiently high effectiveness exist or can be developed). As the findings are based on simulated long-term costs and outcomes, they should not be considered as precise estimates of the impact of non-adherence. This study is rather meant as an illustration of how non-adherence may impact on the results of cost-effectiveness analyses.

Time perspective predicts the progression of permanent organ damage in patients with systemic lupus erythematosus

Patients whose perspective is oriented to the future more than to the present may have better long-term health outcomes. We examined if time perspective predicted future organ damage in patients with systemic lupus erythematosus (SLE). We assessed the time perspectives of 87 patients with SLE using a questionnaire at a baseline visit. Permanent organ damage was assessed by the Systemic Lupus International Collaborating Clinics/American College of Rheumatology (SLICC/ACR) Damage Index during the same visit, and reassessed after a median of 4.6 years. Patients who were oriented more to the future were less likely to have an increase in the Damage Index than those oriented more to the present. In a multivariate analysis, each 1-point increase in the degree of orientation to the future (on a scale of 1-6) was associated with a 22% decrease in the likelihood that the Damage Index would increase over time (odds ratio 0.78; 95% confidence interval 0.64-0.94; P = 0.009). Other measures that predicted an increase in the Damage Index were lower education levels, greater health locus of control attributed to chance and greater health locus of control attributed to powerful others. In conclusion, time perspective is a significant predictor of future organ damage in SLE. Patients who have a greater orientation to the future are less likely to develop permanent organ damage.

Delay discounting in current and never-before cigarette smokers: similarities and differences across commodity, sign, and magnitude

Research has found that nicotine-dependent individuals delay discount monetary gains at a higher rate than matched controls. Delay discount rates, however, have also been found to vary across within-subject variables such as the magnitude of the outcome (e.g., 10 dollars or 1,000 dollars), whether the outcome constitutes a gain or a loss, and the commodity being evaluated (e.g., money or health). The present study comprehensively investigated the differences in delay discounting between current and never-before cigarette smokers and across these within-subject variables. Both groups exhibited a magnitude, sign, and commodity effect. Current smokers' delay discount rates for monetary outcomes, however, were higher than never-before smokers across all magnitudes and both signs. This trend was also found for delayed health outcomes, but failed to reach significance.

Effects of systematic asymmetric discounting on physician-patient interactions: a theoretical framework to explain poor compliance with lifestyle counseling

BACKGROUND

This study advances the use of a utility model to model physician-patient interactions from the perspectives of physicians and patients.

PRESENTATION OF THE HYPOTHESIS

In cases involving acute care, patient counseling involves a relatively straightforward transfer of information from the physician to a patient. The patient has less information than the physician on the impact the condition and its treatment have on utility. In decisions involving lifestyle changes, the patient may have more information than the physician on his/her utility of consumption; moreover, differences in discounting future health may contribute significantly to differences between patients' preferences and physicians' recommendations.

TESTING THE HYPOTHESIS

The expectation of differences in internal discount rate between patients and their physicians is discussed.

IMPLICATIONS OF THE HYPOTHESIS

This utility model provides a conceptual basis for the finding that educational approaches alone may not effect changes in patient behavior and suggests other economic variables that could be targeted in the attempt to produce healthier behavior.

Time-related issues with application to health gains and losses

Time-related aspects of health have attracted increasing interest, and it has become evident that many medical situations concern the exchange of present-day costs for future benefits. Traditional decision analytic paradigms weigh the probability of outcomes and the value of outcomes. Such analyses are incomplete if they do not consider the time of the outcome as well. The concept of diminishing value over time is positive discounting. Time discounting processes and effects have a potentially large impact on clinical decision making. Therefore, characteristics of discounting should be taken into consideration. Discounting processes are variable with individuals and also within different contexts such as gains and losses. No single model can be expected to describe time-related decisions within health. A more diversified use and critical appraisal of these concepts in medicine become more important as we attempt to refine decision models. A summary of valuation factors in medical decision making is presented: (a) long-term decisions are very sensitive to discount rates; (b) discount rates are greater for gains than for losses; (c) discount rates vary by domain, by outcome, by individuals over time, and by level of certainty; (d) individual preferences may reverse themselves over time; (e) the doctor uses expected value; the patient is risk aversive; (f) over a lifetime perspective, a flat or even negative discount rate will result in choices that minimize lifetime disability.

Your money or your health: time preferences and trading money for health

BACKGROUND

Time preferences reflect how future outcomes are valued relative to present ones. Previous research has found that time preferences for one domain (say, money) are inconsistent (uncorrelated) with those from another (say, health). The present studies evaluated whether this domain independence was due to decision makers' sensitivity to a normatively appropriate principle about the tradability of health and money.

METHOD

Participants read a scenario in which health and money were described as tradable or not tradable and then responded to hypothetical intertemporal trade-off questions. RESULTS. In experiment 1, participants showed higher agreement between health and money time preferences in the tradable condition, as predicted. In experiment 2, participants responded from either an individual decision maker or policy maker perspective. Perspective had little effect on agreement between health and money discount rates, but there was again higher agreement in the tradable as compared to the not-tradable condition.

CONCLUSION

Previous demonstrations of domain independence may have been due in part to decision makers' assumption that health and money are not tradable.

Association of time preference for health with age and disease severity

This study assessed the relationship between time preference for health and age and disease severity. An implicit time preference for health was inferred in 59 patients with chronic obstructive pulmonary disease (COPD) using the time tradeoff method with 10-year and 30-year perspectives. The preference rate was calculated by solving the resulting nonlinear equation, solvable for 50 patients.Among the resulting rates, 4 were negative, 8 zero, and 38 positive. The time preference rate ranged from -10.8% to 75.0%, with a median of 6.6%, and a mean of 11.5%. In correlation analysis, the implicit time preference rate was associated with age;however, there was little association with markers of disease severity. In multivariate analysis, only age was a significant predictor of time preference rate after controlling for the other variables in the model.

Discounting and clinical decision making: physicians, patients, the general public, and the management of asymptomatic abdominal aortic aneurysms

Clinical decisions often entail in intertemporal trade-off. Moreover, they often involve physicians of different specialities. In an experiment dealing with the management of small asymptomatic abdominal aortic aneurysms (a clinically relevant problem) we find that specialists in internal medicine exhibit higher implicit discount rates than vascular surgeons, general practitioners, and actual and prospective patients. Several personal characteristics expected to be directly related to pure time-preference and risk aversion (gender, smoking habits, age, place of employment) have the hypothesised effects. Additionally, financial incentives appear to affect the estimated implicit discount rates of physicians, but are unlikely to have caused the inter-group differences. Differences in discount rates could lead to variations in clinical practice, which may conflict with equality of treatment or equal access to health care.

Within-subject comparison of real and hypothetical money rewards in delay discounting

A within-subject design, using human participants, compared delay discounting functions for real and hypothetical money rewards. Both real and hypothetical rewards were studied across a range that included $10 to $250. For 5 of the 6 participants, no systematic difference in discount rate was observed in response to real and hypothetical choices, suggesting that hypothetical rewards may often serve as a valid proxy for real rewards in delay discounting research. By measuring discounting at an unprecedented range of real rewards, this study has also systematically replicated the robust finding in human delay discounting research that discount rates decrease with increasing magnitude of reward. A hyperbolic decay model described the data better than an exponential model.

Theoretical arguments for the discounting of health consequences: where do we go from here?

Despite the theoretical arguments presented in the literature regarding discounting over the last 25 years, no satisfactory reply has yet been offered to the question of whether health consequences have to be discounted at the same rate as monetary consequences in the economic evaluation of health programmes or interventions designed to improve health. Against this background, the main objective of this paper was to review and systemise these theoretical arguments, with the aim of determining whether any of the positions identified can be accepted without reservation. Having determined that this is not possible, we investigated the rationality of discounting in the literature and, on this basis, propose a potential way to resolve the problem. Thus, we argue that the relationship between the discount of monetary and health consequences has to be determined in an indirect manner, by reference to the relationship maintained by the individual time preference rates for health and money in the context of private and social choice. Although this proposal moves the debate into the empirical field, its advantages must be weighed against the difficulties associated with the estimation of the time preferences.

Time is on my side: optimism in intertemporal choice

The present research examines the role of optimism on time preferences for both losses and gains. It is argued that optimism has asymmetric effects on time preferences for gains versus losses: one reason why decision makers prefer immediate gains is because they are optimistic that these gains will be followed by additional gains in future. In contrast, decision makers prefer to delay losses because they are optimistic that losses are avoidable in the future. Optimism about outcomes affects time preferences for both gains and losses, such that low optimism reduces the discount rates while increased optimism is associated with higher discount rates. This prediction was supported in two different domains: monetary outcomes (Study 1), and health (Study 2). Implications of these results for both research practice and time preferences in the real world are discussed.

Time preferences for the very long term

Many important decisions concern outcomes delayed by decades or centuries. Whereas some economists have argued that inter-generational discount rates should be lower than intra-generational rates, three experiments found that inter- and intra-generational discount rates were quite similar. Experiment 1 found that discount rates for long delays (30-900 years) were lower than those for shorter delays (1-30 years) but that, holding delay constant, discount rates for outcomes occurring to future generations were similar to those for outcomes occurring to the present generation. Experiment 2 compared inter-generational discount rates for three different types of outcomes and found similar discount rates for saving lives, improving health, and financial benefits. Experiment 3 found similar inter-generational discounting of life-saving programs that benefit people close to or distant from the decision maker. These studies indicate that the discount rate applied to outcomes occurring to future generations depends on the length of the time delay but not on other factors.

Time Preference for Health: A Test of Stationarity versus Decreasing Timing Aversion

This paper provides a new and more robust test of the descriptive validity of the constant rate discounted utility model in medical decision analysis. The constant rate discounted utility model is compared with two competing theories, Harvey's (1986) proportional discounting model and Loewenstein and Prelec's (1992) hyperbolic discounting model. To compare the various intertemporal models, previous studies on intertemporal preferences for health assumed a specific parametric form of the utility function for life-years and no discounting within the time periods that health states are experienced. The present study avoids such confounding assumptions by focusing on the axiomatic structure of the discounting models. The present study further differs by using choices instead of matching to elicit intertemporal preferences. The experimental results provide support for decreasing timing aversion, the condition underlying the proportional and the hyperbolic discounting model, but they violate stationarity, the central condition of the constant rate discounted utility model. There is some ambiguity whether the violations of stationarity are primarily caused by an immediacy effect. The results confirm violations of stationarity in choice-based elicitations tasks, in contrast with the results from Ahlbrecht and Weber (1997) which supported stationarity in choices over monetary outcomes. Copyright 2001 Academic Press.

Negative and zero time preference for health

The assumption of positive time preference is seldom challenged in analyses of intertemporal choices, despite considerable evidence of zero and negative discount rates. In this study, the majority of respondents have positive discount rates, but a substantial number have negative or zero discount rates. Using probit regression, the perception of the severity of the health-state, gender, education and perception of the questions in terms of difficulty are shown to influence whether individuals have positive discount rates.

Cost-effectiveness analysis: an introductory guide for clinicians

Economic analyses are becoming increasingly prevalent in the obstetrics and gynecology literature, and it is essential that clinicians have a basic comprehension of this research methodology. The purpose of this article is to provide an introduction to economic analysis, in particular cost-effectiveness analysis, and to summarize the basic principles and recently proposed standards for studies using these analytic methods. The fundamental principle of economic analysis is that choices will have to be made between alternative use of resources because there are not unlimited resources to provide all the medical care possible to each individual. These analyses can illustrate the tradeoffs involved in choosing among a variety of clinical interventions to improve health care, and ultimately inform decision making. With a basic understanding of the key concepts of economic analyses, clinicians and health service researchers will be better prepared to critically review these analyses and incorporate them into daily practice.

TARGET AUDIENCE

Obstetricians & Gynecologists, Family Physicians.

LEARNING OBJECTIVES

After completion of this article, the reader will be able to provide an introduction to economic analysis and to summarize the various types of economic analyses, to understand the principle assumption of each analysis and their limitations and to be aware of the various principles of conducting cost-effective analyses.

Do people value their own future health differently from others' future health?

The purpose of this study was to investigate whether time preferences for own health are the same as time preferences for others' health. A random sample of the general public was sent a postal questionnaire containing six choices between ill health in the near future and ill health in the further future. They were asked to indicate the maximum duration of more distant ill health they would be willing to accept in return for a specified delay in the onset of the period of ill health. For half of the sample the questions were set in the context of their own health and for the other half in terms of others' health. The median implied discount rates were not statistically different, 0.061 for own health and 0.062 for others' health. A multilevel analysis of the determinants of these implied discount rates provided additional evidence of the similarity of time preferences for own health and others' health.

Applying Decision-Making Approaches to Health Risk-Taking Behaviors: Progress and Remaining Challenges

This paper critically examines how risk-taking behaviors can be modeled from a decision-making perspective. We first review several applications of a decision perspective to the study of risk-taking behaviors, including studies that investigate consequence generation and the components of the overall utility (i.e., consequence, desirability, and likelihood) of risk-taking and studies that investigate the validity of two decision-oriented models (subjective expected utility and the theory of reasoned action) in predicting risk-taking behaviors. We then discuss challenges in modeling risk-taking behaviors from a decision-making perspective. These challenges include (i) finding the factors that are necessary to improve the predictability of models, (ii) difficulties in eliciting the individual components of overall utility, and (iii) incorporating overall utility changes over time. Copyright 1999 Academic Press.

Implicit discount rates of vascular surgeons in the management of abdominal aortic aneurysms

A growing empirical literature has investigated attitudes towards discounting of health benefits with regard to social choices of life-saving and health-improving measures and individuals' time preferences for the management of their own health. In this study, the authors elicited the time preferences of vascular surgeons in the context of management of small abdominal aortic aneurysms, for which the choice between early elective surgery and watchful waiting is not straightforward. They interviewed 25 of a random sample of 30 Swedish vascular surgeons. Considerable variation in the time preferences was found in the choices between watchful waiting and surgical intervention among the otherwise very homogeneous group of surgeons. The discount rates derived ranged from 5.3% to 19.4%. The median discount rate (10.4%) is similar to those usually reported for social choices concerning life-saving measures. The surgeons who were employed in university hospitals had higher discount rates than did their colleagues in county and district hospitals.

Constant and decreasing timing aversion for saving lives

The traditional model of time preferences employed by economists is characterised by constant timing aversion. The available evidence suggests that this is not an appropriate assumption. This paper examines evidence for constant and decreasing timing aversion with respect to saving lives. Three discounting models are considered: the constant discounting model; the proportional discounting model; and the hyperbolic discounting model. Data collected from the general public are used to test the constant timing aversion model. Overall, the findings suggest that there is substantial evidence for decreasing timing aversion and against the constant timing aversion hypothesis.

A cost-effectiveness analysis of anterior temporal lobectomy for intractable temporal lobe epilepsy

Patients with medically intractable temporal lobe epilepsy are potential candidates for anterior temporal lobectomy (ATL), in which epileptogenic temporal lobe tissue is localized and surgically removed. This surgical approach can eliminate or drastically reduce seizures in the majority of patients. The authors used a decision-analysis model to examine the cost-effectiveness of a surgical evaluation and treatment protocol for medically intractable temporal lobe epilepsy. This model compared a cohort treated with the new protocol with a continuation of their immediate preoperative medical management and projected these differences over the patient's lifetime. The Markov model incorporated postoperative seizure status, patient quality of life, death from surgical and natural causes, discounting, and the direct medical costs associated with outpatient evaluation, hospitalization, surgery, antiepileptic drugs, and lifetime outpatient treatment. The intent-to-treat analysis included patients who underwent evaluation but were not eligible for ATL. Sensitivity analyses were also performed on the variables in the model. Data from the baseline model indicated that evaluation for ATL provided an average of 1.1 additional quality-adjusted life years (QALYs) compared with continued medical management, at an additional cost of $29,800. Combining the clinical and economic outcomes yielded a cost-effectiveness ratio of $27,200 per QALY. This value is comparable to other accepted medical or surgical interventions, such as total knee arthroplasty ($16,700/QALY) or coronary artery balloon angioplasty ($40,800/QALY). Sensitivity analyses demonstrate that the results are critically dependent on postoperative seizure status and improvement in quality of life. Although further work is necessary to quantify the improvement in quality of life after epilepsy surgery better, the present data indicate that ATL for treatment of intractable temporal lobe epilepsy is a cost-effective use of medical resources.

The cost-effectiveness of mammography screening: evidence from a microsimulation model for New Zealand

Mammography screening currently represents the only means by which the mortality rate from breast cancer can be modified substantially. A national mammography screening programme is being considered for New Zealand, and pilot programmes were established in two regions (Otago/Southland and Waikato) in 1991 to determine the potential costs and benefits of mammography for New Zealand women. The aim of this paper is to explore the cost-effectiveness of mammography screening in New Zealand relative to no screening, and to examine the marginal change in costs and benefits of altering programme characteristics such as the age of women invited and screening frequency. Cost-effectiveness is measured by the net cost (the costs of screening minus the treatment savings averted by the early detection of cancers) per year of life gained, from the perspective of the public health care sector. A microsimulation computer model, MICROLIFE, was developed to facilitate the estimation of mortality reduction and cost-effectiveness. The results show that, while mammography screening does not 'save money' overall, the cost per year of life saved for a range of policies compares favourably with other New Zealand health services, and is comparable to the results from economic evaluations of mammography screening overseas. Of those regimes considered, screening women 50-64 years of age at 3-yearly intervals appears to be most cost-effective.