Multivariate risk preferences in the quality‐adjusted life year model

The interest in multivariate and higher‐order risk preferences has increased. A growing body of literature has demonstrated the relevance and impact of these preferences, but for health the evidence is lacking. We measure multivariate and higher‐order risk preferences for quality of life (QoL) and longevity, the two attributes of the Quality‐Adjusted Life Year (QALY) model. We observe preferences for a positive correlation between these attributes and for pooling together a fixed loss in one of the attributes and a mean‐zero risk in the other, and for pooling together mean‐zero risks in QoL and longevity. The findings indicate that higher‐order risk preferences are stronger for health than for money. Furthermore, we test if preferences for a risky treatment for a disease affecting only QoL, depend on life expectancy. We find no such a relation, but there is a positive relation between riskiness of a comorbidity affecting life expectancy and risk aversion for a QoL treatment. We therefore observe no definitive deviation from the QALY model, although the model is more robust when expected longevity is high. Our findings suggest that the current practice of cost‐effectiveness analysis should be generalized to account for risk aversion in QoL and longevity, and higher‐order preferences.