A REFERENCE LOTTERY METRIC FOR VALUING HEALTH

This study utilizes reference lotteries on life and death to establish a death-equivalent metric for valuing long-term health effects. We us e a computer-based survey approach to elicit choices among residential locations that pose different risks of chronic disease and dying in a n automobile accident. From paired choices between different locations , we infer their rates of trade-off between reducing the risks of chro nic diseases and the automobile death risk. The values of reducing the risks from two diseases, a nerve disease (peripheral neuropathy) and lymphoma (cancer of the lymph system), are measured in terms of both t rade-off rates with the risk of an automobile death and with dollars. While the use of reference lotteries for monetary outcomes to establis h a utility metric is well established for monetary outcomes, our resu lts suggest that reference lotteries on life and death can also be app lied with decision-makers facing realistic choices to construct a util ity metric for valuing health status. The results were corroborated by a strong positive correlation between the risk-risk trade-off values and relative aversion scores for the different health outcomes, as wel l as by the relative values of avoiding the three diseases in our stud y.