The effect of discounting on quality of life valuation using the Time Trade-Off, CHERE Working Paper 2008/3

Cost-utility analysis, combining mortality effects with health-related quality of life effects, has become the preferred method for presenting economic evaluation. It allows comparability between potential investments in different areas of health and healthcare as the outcomes are generic and designed to be applicable in multiple contexts. There are various methods for estimating health-related quality of life scores but one major approach is the use of the Time Trade-Off. Evidence has suggested that scores from this measure are relatively lower than from other measures. We argue that one possible reason for this is that the TTO method artificially deflates valuation scores because it does not take account of time preference. The extent of the deflation depends on the duration of survival offered for the health state in question, the true valuation placed on that state, and the individual?s rate of time preference. This has implications for the use of TTO valuation scores in economic evaluation, particularly when models are populated using health-related quality of life scores from sources using different methods.