Constant risk attitude

Constant risk attitude

It is often argued that the Standard Gamble (SG) method is superior to other methods such as the Time Trade-Off (TTO) because it incorporates uncertainty through the use of risk of death as the response scale. However, most uncertainty is not of the ‘life or death’ form. If individuals’ risk attitude is not constant but depends on the kind of health risk, the argument in favour of SG may not hold. There is evidence in the psychology literature that risk attitude varies across different domains and situations. This has not been robustly tested using health outcomes. This study examined whether individuals’ risk attitude for fatal changes in health is different from individuals’ risk attitude for non- fatal changes in health. The study also investigated two different framing effects, an order and sequence effect, and the interaction between risk attitude and time preferences.

Outcome and translation

The results showed that individuals tended to be risk averse with respect to the gamble involving risk of immediate death and risk seeking with respect to the other health gambles. Varying the order of the questions or the sequence of full health and ill-health did not seem to systematically bias the estimates. This study adds to the body of empirical evidence on the robustness of the underlying assumptions of the methods used to elicit these values.

HERU researchers involved in this research project: Marjon van der Pol

External collaborators: MC Ruggeri (Catholic University Rome)

Publications

Pol, M. van der. and Ruggeri, M. (2008) 'Is risk attitude outcome specific within the health domain?' Journal of Health Economics, 27 (3), 706-717

Ruggeri, M. and Pol, M. van der (2012) 'Is risk attitude really specific within the health context domain? Further evidence from an Italian survey using probability equivalent technique and face-to-face interviews', Health Risk & Society, 14(7-8), 655-666.

Presentations

Pol, M. van der and Ruggeri, M. (2007) 'Is risk attitude in health context-specific?' 12th Annual Conference of the Italian Health Economics Association, Florence, October 2007.

Ruggeri, M. And Pol, M. van der (2008) 'L’attitudine individuale al rischio nel contesto sanitario: risultati di un’indagine empirica', La Società Italiana di Health Technology Assessment (SIHTA), Rome, February 2008.

Pol, M. van der and Ruggeri, M. (2006) 'Is risk attitude in health context-specific?' European Conference on Health Economics, Budapest, July 2006.

Ruggeri, M. and Pol, M. van der (2009) 'Is risk attitude really specific in a health context?' IHEA, Beijing, July 2009.

Pol, M. van der and Ruggeri, M. (2007) 'Is risk attitude context-specific within the health domain?' HTAi, Barcelona, June 2007.