13 Research methods, statistics, critical review and evidence-based practice13.6 Economic analysis
13.6.7.6 Standard gamble
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Written by Resident Doctor Committee · Published
New in the 2027 syllabus
The College added this topic for exams from January 2027.
What it is
The standard gamble measures utility: the value a person places on a health state, where full health is 1 and death is 0.
The person compares two options. The certain option is living in a specified health state. The gamble is an uncertain alternative that gives either full health or immediate death. The chance of full health is varied until the person cannot choose between the two. This is the point of indifference. If the assumptions of expected-utility theory apply, the utility of the health state equals that probability.
Worked example
Assume both hypothetical options cover the same remaining lifetime.
Choice | Outcome | Probability |
|---|---|---|
Certain option | Specified impaired health state | 1.00 |
Gamble | Full health | 0.80 |
Gamble | Immediate death | 0.20 |
Expected utility of the gamble = (0.80 x 1) + (0.20 x 0) = 0.80.
At indifference, the certain health state also has a utility of 0.80.
The 0.20 chance of death is the risk accepted, not the utility of the health state.
Interpreting the results
Attitude to risk affects answers, so standard gamble utilities can differ from time trade-off values for the same state.
Standard gamble versus time trade-off: the standard gamble varies uncertainty. Time trade-off compares different lengths of life, each of them certain.
Understanding of probability and framing matter. Misunderstanding a small risk can shift the apparent point of indifference.
Health state descriptions must be consistent and easy to understand. If the states are described differently, you cannot isolate the effect of the method used to obtain the values.
It is a hypothetical exercise. It is not a recommendation that anyone actually undergo a dangerous procedure.