We should ask people about their experiences rather than asking them hypothetical questions in attempting to judge how much they value different scenarios. That is the conclusion of research by Professor Paul Dolan and Nobel laureate Professor Daniel Kahneman, published in the January 2008 issue of The Economic Journal.
This argument is particularly compelling when attempting to decide which health conditions should be given the most treatment. By asking people how they feel, rather than how they think they might feel, we can more accurately assess the benefits of different policies.
Most of us would agree that health-rationing decisions about how to spend taxpayers” money should be informed by the value of the benefits that spending generates. The question is how to judge the value of those benefits.
Up until about 100 years ago, economists would have thought about benefits in terms of people”s experiences – the greater an individual”s enjoyment of an outcome, the greater her benefit. More recently, they have thought about benefits in terms of preferences – the stronger an individual”s preference for that outcome, the greater the benefit.
Health economists are fond of asking the general public preference questions like ”how many years in full health would you consider equivalent to being unable to walk for ten years?” The problem with this approach is that the public are not very good at assessing what it would be like to experience different states of health.
In particular, the public tend to be biased in ways that lead them to overestimate the severity of the loss in wellbeing associated with many (but not all) health states. This is not really surprising because our responses to questions like the one posed above will largely reflect our immediate emotional reactions to the health state in question.
In the case of some severe health states, this is likely to be an initial shock reaction to, or fear associated with, that state. We could instead elicit preferences from patients, as this would mean that the respondents would have direct experience of the health states in question.
Unfortunately, all responses to preference-based methods reflect whatever that respondent thinks about or feels at the time of the assessment, which may not be what they will think about or feel while experiencing that health state.
Patients could also be asked to consider their previous experiences when making hypothetical choices about the future. But there is evidence that we are not very much better at remembering the impact of past experiences than we are at predicting the impact of future ones.
To reflect more accurately the effect of different states of health on people”s wellbeing, and to show where health services really benefit people, the researchers suggest that policy-makers in health and elsewhere should shift their attention away from the measurement of preferences towards more direct measures of the experiences associated with different states of the world.
One possible way to do this is to ask people to state how they felt during various activities on the previous day. The method is a recent development and its successful use in future empirical studies in health and elsewhere will require an interdisciplinary approach involving economists and psychologists, and others with expertise in particular applications (such as clinicians in the case of health).
”Interpretations of Utility and their Implications for the Valuation of Health” by Paul Dolan and Daniel Kahneman is published in the January 2008 issue of The Economic Journal.