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© 1992 Faculty of Public Health Medicine of the Royal Colleges of Physicians of the United Kingdom

research-article

Discounting in health care decision-making: time for a change?


Trevor A. Sheldon, Lecturer in Medical Statistics

Academic Unit of Public Medicine, University of Leeds 30 Hyde Terrace, Leeds LS2 9LN

Economic appraisal is increasingly being used to inform health care decision–making. To allow comparison, costs and benefits spread over time are weighted according to when they are experienced. The further in the future, the less heavily they are weighted or the more they are discounted. Traditional economic appraisal techniques are based on the view that social decisions should reflect private preferences. The practice of discounting future streams of costs and benefits is principally justified by the fact that individuals have a positive time preference, preferring consumption sooner rather than later. Discounting weights public decision–making in favour of interventions resulting in short-term benefits and against longer-term benefits. This discriminates against preventive and other public health programmes. This paper provides a critique of the foundations of discounting. It is argued that health policy should have a longer time horizon, reflecting social values rather than individual preferences. Factors which make discounting the future rational from the individual's point of view are shown to be irrelevant to a societal perspective. Although uncertainty about the effectiveness of interventions and technological change are good reasons for weighting some future benefits less highly, the routine use of a single discount rate for economic evaluations of health programmes is not justified


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