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Reallocation of lifetime consumption and discounting of future utilities affects the accuracy of estimates related to ratios of individual marginal rates of substitution (MRS). Overestimation of ratios of individual MRS occur whenever responses to time trade-off (TTO) questions are not modified with the effects resulting from lifetime reallocation of consumption and discounting. The degree of overestimation relies partly to the severity of impairment on health status.

London Underground Ltd. (LUL) is seeking a method for determining the monetary value of underground transport safety based on its commitment to maximize net social benefits within specific constraints. Thus, customer preference for such safety must be considered. To ensure the firm's balanced safety expenditures, a willingness-to-pay scheme must be introduced. Research has been funded by LUL to obtain proper estimates for transport safety.

The UK Dept. of Transportation changed the valuation method for the prevention of fatal road injuries. Willingness-To-Pay, which represents the amount individuals will give up for reducing fatal accident risk, integrated direct economic costs to the total value. The new valuation method commenced after much research was made and after the Transport Research Laboratory updated economic costs.

Abstract Background Since the inception of the National Institute for Health and Clinical Excellence (NICE) in England, there have been questions about the empirical basis for the cost-per-QALY threshold used by NICE and whether QALYs gained by different beneficiaries of health care should be weighted equally. The Social Value of a QALY (SVQ) project, reported in this paper, was commissioned to address these two questions. The results of SVQ were released during a time of considerable debate about the NICE threshold, and authors with differing perspectives have drawn on the SVQ results to support their cases. As these discussions continue, and given the selective use of results by those involved, it is important, therefore, not only to present a summary overview of SVQ, but also for those who conducted the research to contribute to the debate as to its implications for NICE. Discussion The issue of the threshold was addressed in two ways: first, by combining, via a set of models, the current UK Value of a Prevented Fatality (used in transport policy) with data on fatality age, life expectancy and age-related quality of life; and, second, via a survey designed to test the feasibility of combining respondents' answers to willingness to pay and health state utility questions to arrive at values of a QALY. Modelling resulted in values of £10,000-£70,000 per QALY. Via survey research, most methods of aggregating the data resulted in values of a QALY of £18,000-£40,000, although others resulted in implausibly high values. An additional survey, addressing the issue of weighting QALYs, used two methods, one indicating that QALYs should not be weighted and the other that greater weight could be given to QALYs gained by some groups. Summary Although we conducted only a feasibility study and a modelling exercise, neither present compelling evidence for moving the NICE threshold up or down. Some preliminary evidence would indicate it could be moved up for some types of QALY and down for others. While many members of the public appear to be open to the possibility of using somewhat different QALY weights for different groups of beneficiaries, we do not yet have any secure evidence base for introducing such a system.

New Zealand's Resource Management Act is frequently criticised for the costs and delays it imposes on activities, but less attention is given to the consistency of values it applies to environmental effects through its decisions. The wide variety of parties who exercise decision roles under the act lack guidance on the economic value of the environment, and non-market valuation studies are too costly to be widely used and too few and varied to infer reliable generic values. Drawing on experience in estimating the public value of safety improvements, this article proposes an alternative approach that measures people's aversion to the risk of environmental impacts of different scales and severity which could yield values sufficiently generic to be widely used, and outlines its uses both within and beyond the RMA applications. [ABSTRACT FROM AUTHOR]

Background: Since the inception of the National Institute for Health and Clinical Excellence (NICE) in England, there have been questions about the empirical basis for the cost-per-QALY threshold used by NICE and whether QALYs gained by different beneficiaries of health care should be weighted equally. The Social Value of a QALY (SVQ) project, reported in this paper, was commissioned to address these two questions. The results of SVQ were released during a time of considerable debate about the NICE threshold, and authors with differing perspectives have drawn on the SVQ results to support their cases. As these discussions continue, and given the selective use of results by those involved, it is important, therefore, not only to present a summary overview of SVQ, but also for those who conducted the research to contribute to the debate as to its implications for NICE. Discussion: The issue of the threshold was addressed in two ways: first, by combining, via a set of models, the current UK Value of a Prevented Fatality (used in transport policy) with data on fatality age, life expectancy and age-related quality of life; and, second, via a survey designed to test the feasibility of combining respondents' answers to willingness to pay and health state utility questions to arrive at values of a QALY. Modelling resulted in values of £10,000-£70,000 per QALY. Via survey research, most methods of aggregating the data resulted in values of a QALY of £18,000-£40,000, although others resulted in implausibly high values. An additional survey, addressing the issue of weighting QALYs, used two methods, one indicating that QALYs should not be weighted and the other that greater weight could be given to QALYs gained by some groups. Summary: Although we conducted only a feasibility study and a modelling exercise, neither present compelling evidence for moving the NICE threshold up or down. Some preliminary evidence would indicate it could be moved up for some types of QALY and down for others. While many members of the public appear to be open to the possibility of using somewhat different QALY weights for different groups of beneficiaries, we do not yet have any secure evidence base for introducing such a system. [ABSTRACT FROM AUTHOR]

How should a developed country quantify the costs and benefits of the safety externalities that its energy and environmental policies generate for a developing country and vice versa? This paper addresses this question within a conventional utilitarian welfare-economics framework on the assumption that citizens of the countries concerned are rational economic agents. Counter to moral intuition, the paper shows that a developed country that displays purely altruistic concern for the wellbeing of citizens of a developing country will not value the safety externalities that it generates for the developing country at the developed country's "high" value of safety, but will instead apply the developing country's own "low" value. In turn, it is shown that even if the developing country displays a corresponding degree of purely altruistic concern for the wellbeing of citizens of the developed country it will nonetheless value the safety externalities that it generates for the developed country at a substantial discount relative to its own "low" value of safety. The paper also explores the implications of other forms of altruistic concern. [ABSTRACT FROM AUTHOR]

Background. It has been argued that visual analog scales (VASs) elicit an individual’s measurable value function. The theoretical link between an individual’s measurable value function v(.) and his or her von Neumann-Morgenstern utility function u(.) appears to provide a justification for transforming VAS scores into standard gamble (SG) utilities. However, VAS scores have been found to be subject to the effects of context, which casts doubt that the procedure is properly revealing v(.). Methods. The authors tested for the effects of context on VAS and SG scores. They also explored whether the range-frequency (R-F) model of Parducci offers a means of correcting VAS scores for the effects of context. Results and conclusions. The R-F model may provide a means of correcting VAS scores for the effects of context, but no stable relationship exists between these corrected scores and SG utilities. Hence, there remain no grounds for transforming VAS scores into SG utilities. [ABSTRACT FROM PUBLISHER]

Contingent valuation (CV) has been widely used to measure the potential benefits derived from different policy decisions. However, doubt now exists about the validity of the CV method and alternative approaches to benefit valuation have been proposed. The paper reports on the results of a study which was designed to test the viability of two of the most prominent of the alternatives: the risk-risk (RR) and standard gamble (SG) approaches. If individual preferences are consistent with the axioms of von Neumann-Morgenstern expected utility theory (EUT) then the two methods should generate the same interval scales for any given set of health states. However, the results show that SG utilities are substantially higher than RR ones, thus casting doubt on these axioms. The paper discusses alternatives to EUT which might better explain the discrepancies found. It also considers whether the results might be explained in terms of status-quo bias and/or by the relative difficulty of RR questions. The results presented may have important implications for other areas of applied research in which there exists uncertainty about outcomes. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to develop and test a model of the promotional expenditure decision for a firm operating under conditions of combined uncertainty and oligopoly. The uncertainty is assumed to exist in respect of the impact of any particular level of promotional expenditure upon the demand conditions facing the firm.
The analysis forms part of a wider study of advertising by confectionery manufacturers and arose largely as a result of conversations with advertising executives in the confectionery market. In the course of these discussions it became clear that the existing body of theory concerning the promotional expenditure decision is almost completely incapable of accommodating the extensive uncertainty which is an integral part of the promotional decision in a market such as that under consideration. It also became clear (at least in the case of the confectionery market) (a) that decision makers regard the pricing and promotional expenditure decisions as being largely independent and (b) that in a large number of cases decision makers think in terms of a minimum or 'threshold' level of promotional expenditure. While these factors are predominantly in the nature of impressionistic informal observations and therefore of doubtful validity as bases for a scientific enquiry, it was nonetheless felt worthwhile to attempt to develop a theoretical framework capable of accommodating them. [ABSTRACT FROM AUTHOR]

Reports on the developed theories of Kalman in which consumer preferences are directly affected by prices. Significance of Lagrange multiplier from first order conditions; Comparison between the Kalman and Slutsky consumer theories; Verifications of the validity of the theories.