Time preference for health: A test of stationarity versus decreasing timing aversion

This paper. provides a new and more robust test of the descriptive validity of the constant rate discounted utility model in medical decision analysis . The constant rate discounted utility model is compared with two competing theories, Harvey's (1986) proportional discounting model and Loewenstein a nd Prelec's (1992) hyperbolic discounting model. To compare the various int ertemporal models, previous studies on intertemporal preferences for health assumed a specific parametric form of the utility Function For life-yeats and no discounting within the time periods that health states are experienc ed. The present study avoids such confounding assumptions by focusing on th e axiomatic structure of the discounting models. The present study further differs by using choices instead of matching to elicit intertemporal prefer ences. The experimental results provide support for decreasing timing avers ion, the condition underlying the proportional and the hyperbolic discounti ng model, but they violate stationarity, the central condition of the const ant rate discounted utility model. There is some ambiguity whether thr viol ations of stationarity are primarily caused by an immediacy effect. The res ults confirm violations of stationarity in choice-based elicitations tasks, in contrast with the results from Ahlbrecht and Weber (1997) which support ed stationarity in choices over momentary outcomes. (C) 2001 Academic Press .