Why is discounting applied in economic evaluations?

• A. To reflect time preference for costs and outcomes
• B. To adjust for inflation independently
• C. To align patient preferences
• D. To correct for sampling error

Answer: (A)

The main idea behind discounting in economic evaluations is the value people place on benefits and costs now versus in the future. Because resources could be used elsewhere today and because future benefits could be earned or spent differently, future costs and health outcomes are worth less in present terms. Discounting converts future costs and outcomes into their present value using a chosen discount rate, so you can compare everything on an equal time basis.

In practice, you typically apply the same discount rate to both costs and health outcomes to avoid bias toward immediate or delayed benefits. This reflects the opportunity cost of capital and the preference for receiving benefits sooner rather than later. Separately, researchers may adjust nominal prices for inflation to real terms, but discounting itself is about time value, not price level changes.

The other ideas don’t fit as the primary rationale: inflating prices separately addresses price level changes rather than the timing of benefits and costs; aligning patient preferences is about how outcomes are valued, not how their timing is valued; and correcting sampling error has to do with data accuracy, not the value of future versus present effects.