Using discrete choice experiments to derive welfare estimates for the provision of elective surgery: Implications of discontinuous preferences

The estimation of a discrete choice experiment model complying with consumer theory axioms allows estimation of the welfare implications of alternative policies. Such a normative approach anchors the results of discrete choice experiments within a welfare economics framework. Where cost is included in the design, compensating variation can be estimated, permitting the use of the results directly within cost–benefit analysis. Any assumptions made about compliance with axioms however directly impact upon the welfare estimates derived from discrete choice experiments. Hence if discrete choice experiments are to be used to estimate welfare within health care, it is important that issues surrounding adherence to these axioms are explored. The study showed that a significant proportion of the sample did not comply with the axioms of continuity and transitivity, as defined by the specific tests used. This study compares welfare estimates obtained from continuous preferences with those which appear to be discontinuous. The results raise questions about how discrete choice experiment derived preferences should be incorporated into a traditional welfare economics framework