Empirical bounds on the value of improved health

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See all articles by Daniel Herrera-Araujo

Daniel Herrera-Araujo

Mines Paris - PSL; Université Paris-Dauphine

James K. Hammitt

Harvard University

Christoph Rheinberger

affiliation not provided to SSRN

Date Written: January 21, 2025

Abstract

Policies aimed at improving health and longevity are often evaluated by monetizing their expected gains in

quality-adjusted life years (QALYs). The monetization is usually done by dividing an estimate of the value

per statistical life (VSL) by the QALYs the average individual is expected to still have ahead of them. We

employ data from an online survey taken by a representative sample of French adults to explore the validity

of this practice and derive empirical bounds on the willingness-to-pay (WTP) for a marginal improvement

in either health quality or longevity. Testing whether the empirical bounds on the WTP for improved health

and longevity are the same offers a novel test for the descriptive validity of the QALY model. Our empirical

results let us refute this practice routinely applied in health and environmental economics.

JEL Classification: D03, D10, D81, I18, Q18, Q51

Suggested Citation

Herrera-Araujo, Daniel and Hammitt, James K. and Rheinberger, Christoph,

Empirical bounds on the value of improved health

(January 21, 2025). Available at SSRN: https://ssrn.com/abstract=

Daniel Herrera-Araujo (Contact Author)

Mines Paris - PSL ( email )

60 Bd Saint-Michel
Paris, 75272
France

Université Paris-Dauphine ( email )

Place du Maréchal de Tassigny
Paris, Cedex 16 75775
France

James K. Hammitt

Harvard University ( email )

718 Huntington Avenue
Boston, MA 02115
United States
617-432-4343 (Phone)
617-432-0190 (Fax)

Christoph Rheinberger

affiliation not provided to SSRN ( email )

No Address Available

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