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The practice of discounting in economic evaluations of healthcare interventions

Smith, D.H. and Gravelle, H. (2001) The practice of discounting in economic evaluations of healthcare interventions. International Journal of Technology Assessment in Health Care. pp. 236-243. ISSN 0266-4623

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Objectives: Discounting of costs in health-related economic evaluation is generally regarded as uncontroversial, but there is disagreement about discounting health benefits. We sought to explore the current recommendations and practice in health economic evaluations with regard to discounting of costs and benefits. Methods: Recommendations for best practice on discounting for health effects as set out by government agencies, regulatory bodies, learned journals, and leading health economics texts were surveyed. A review of a sample of primary literature on health economic evaluations was undertaken to ascertain the actual current practice on discounting health effects and costs. Results: All of the official sources recommended a positive discount rate for both health effects and costs, and most recommended a specific rate (range, 1% to 8%). The most frequently specified rates were 3% and 5%. A total of 147 studies were reviewed; most of these used a discount rate for health of either 0% (n = 50) or 5% (n = 67). Over 90% of studies used the same discount rate for both health and cost. While 28% used a zero rate for both health and cost, in 64% a nonzero rate was used for both. Studies where the health measure was in natural clinical units (direct) were significantly more likely to have a zero discount rate. Conclusion: The finding that 28% of studies did not discount costs or benefits is surprising and concerning. A lower likelihood of discounting for benefits when they are in natural units may indicate confusion regarding the rationale for discounting health effects.

Item Type: Article
Copyright, Publisher and Additional Information: Copyright © 2001 Cambridge University Press
Keywords: Discounting,Economics,Health effects,Time preference
Institution: The University of York
Academic Units: The University of York > Centre for Health Economics (York)
Depositing User: Repository Officer
Date Deposited: 28 Jan 2005
Last Modified: 28 Jul 2016 08:43
Status: Published
Refereed: Yes
URI: http://eprints.whiterose.ac.uk/id/eprint/255

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