Multivariate risk preferences in the QALY model

In recent years the interest in multivariate and higher-order risk preferences has increased noticeably. A growing body of literature has demonstrated both the relevance and the impact of these preferences in several domains, although for health the empirical evidence is lacking. In this study we empirically measure multivariate and higher-order risk preferences for quality of life and longevity, the two elements of the Quality-Adjusted Life Year (QALY) model. We observe overwhelming support for correlation seeking between these two attributes as well as significant evidence of cross-imprudence and cross-intemperance. These findings indicate that higher-order risk preferences appear to deviate more from neutrality for health than for money. Furthermore, we test if preferences for a risky treatment for a disease affecting only quality of life, depend on life expectancy. Our results show no systematic evidence of such a relation, although there is a marginally significant positive relation between riskiness of the comorbidity affecting life expectancy and risk aversion for a treatment affecting quality of life. We therefore observe no definitive deviation from the QALY model, although the model appears to be more robust when expected longevity is high.