Discounting and health benefits

TLDR

The paper argues that non‑monetary health benefits should not be discounted at the same rate as monetary costs, proposing a discount rate close to zero. It examines how rising income, age, and pure time preference affect the relative value of current versus future health states, and reviews arguments—such as uncertainty and delay—that justify discounting health benefits at the same rate as monetary costs. The article concludes that adopting a zero discount rate would alter the ranking of health interventions.

Abstract

This paper argues that non-monetary health benefits should not be discounted at the same rate as variables expressed in monetary terms. It argues instead that the appropriate discount rate should be at or close to zero. It explores the various influences of rising income, age and pure time preference on the relative value of current and future health states. It examines various arguments advanced to justify the current practice of discounting health benefits at the same rate as monetary costs. These include uncertainty and delay. The article concludes with an analysis of the likely impact of adopting a zero discount rate on the ranking of health interventions.