The economics of measuring quality of life by the standard gamble method


  • Eric EISENSTAT Lecturer Ph.D.
  • Manuela EPURE Assoc. Prof. Ph.D. Faculty of Marketing and International Affaires Spiru Haret University
  • Patrick Francis GRAY Prof. Ph.D. University of Ulster, UK


quality of life, measurement, cost-effectiveness analysis, von Neumann-Morgenstern utilities, Romanian well-being index


Of the countless methods for measuring the quality of life (QOL) that have been proposed and analyzed by the vast, multi-disciplinary literature over the past decades, only a select few are alluded to in Romanian scientific circles, and even fewer are actually implemented in practical applications. In adapting existing techniques and engineering a viable measurement system specific to Romania, there exists an important opportunity to re-evaluate the merits and shortcomings of established approaches. As a specific example, we consider the Standard Gamble (SG) method of eliciting “subjective utilities” related to particular health states. The re-evaluation is accomplished from three perspectives: theoretic consistency, interpretability and practicality. It is demonstrated that consistent with economic theory, the appropriate interpretation of SG derived measures is that of a Hicksian change in welfare valuation, rather than a cardinal measure of preferences. A practical consequence of the latter is that SG will necessarily produce a higher QOL value for individuals exhibiting more risk aversion. This leads us to contemplate that in fact SG may be a more appropriate methodology in other contexts, not necessarily health-related, where quality of life may indeed be correlated with the willingness to take risks. 


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How to Cite

EISENSTAT, E., EPURE, M., & GRAY, P. F. (2011). The economics of measuring quality of life by the standard gamble method. Annals of Spiru Haret University. Economic Series, 11(1), 81–100. Retrieved from