Decisions about Health: Behavioral experiments in health with applications to understand and improve health state valuation
Decisions about health have to be made on a regular basis, both by individuals (e.g. ‘Should I have surgery or ask for radiation therapy?’) but also at the societal level (e.g. ‘Is this life-improving drug too expensive to fund from public health care resources?’). How do individuals and societies make such decisions in practice, and does economic research provide the right tools to inform and study such decision-making?
In his dissertation, Stefan Lipman tries to answer these questions. In economics, decisions about health are typically studied assuming they are made rationally. That is, it is assumed that from all available options, after weighing all relevant pros and cons, the optimal outcome is selected. However, over the past decades the traditional economic view of rationality has been suggested to be highly unrealistic.
Behavioral experiments in health
As most work challenging this view is based on financial decision-making, in the first part of his dissertation, Lipman extends some of these findings to health in a series of behavioral experiments. For example, he shows that many individuals are loss averse for health, i.e. they are more sensitive to health losses than to equally sized health gains. However, large differences exist between individuals’ decision-making tendencies. Policy makers aiming to improve decisions about health should, therefore, consider policies tailored to each individual. In his dissertation, Lipman explores such tailoring for exercise behavior.
Understanding and improving the valuation of health
Societal decisions about health are often informed by comparing the costs and benefits of some health intervention. Assessing these health benefits, however, requires some quantitative measure to express health in and adequate methods to facilitate such quantification. Lipman’s research focuses on two methods used for this valuation of health, that would typically yield different results. This is problematic, as societal decision about health may become dependent the method chosen for valuing health. Lipman explores why these methods yield different results and possible solutions. As in the first part of the dissertation, it appears that rather than assuming rationality, taking into account differences in individual decision-making could resolve the differences between methods.