Introduction: Preference-based instruments measuring health status express the value of specific health states in a single number. One method used is time trade-off (TTO). Health-status values are key elements in calculating quality-adjusted life years (QALYs) and are pertinent for resource allocation. Since they are used in economic evaluations of healthcare, searching for a theoretical foundation of TTO in economics is justified.
Area covered: This paper provides an overview of TTO, including its relation to economic theory, and discusses biases and distortions, compiled from recent and older research. Inconsistencies between TTO and random utility theory were detected; The TTO is confounded by time preferences and by respondents' life expectancies. TTO is cognitively challenging, therefore guidance during the interviews is needed, producing interview effects. TTO does not measure one thing at a time, nor are the values independent of other states that are being valued in the same task. That is, TTO does not exhibit theoretical measurement properties such as unidimensionality and the invariance principle.
Expert opinion: We conclude that the TTO may be a pragmatic method of eliciting health state values, but the limitations in regard to measurement theory and practical elicitation problems makes it prone to inconsistencies and arbitrariness.
Keywords: Economic evaluation; QALY; health related quality of life; health state valuation; pharmacoeconomics; utilities.