Abstract

The important topic of how to value future health states goes under the unfortunate title of “discounting.” The discount rate can best be thought of as an interest rate applied to reductions rather than increases. Interest rates have to do with return on money. A 5% interest rate means your £100 in a bank is worth £105 in a year’s time. In reverse, a £105 to be paid in a year has a present value of £100. The £105 is discounted by 5%.