QALYs and Policy Evaluation: A New Perspective

84 Pages Posted: 28 Jan 2005 Last revised: 21 Dec 2014

Date Written: January 27, 2010

Abstract

This Article presents a new, welfarist defense of the use of QALYs (quality adjusted life years) in policy evaluation. It challenges both the conventional wisdom among health economists that QALY-based analysis is dominated by traditional cost-benefit analysis (i.e., the sum of willingness-to-pay amounts) as well as the standard view of public health researchers that QALYs should function as the effectiveness metric in a cost-effectiveness analysis. Instead, the Article defends a nontraditional form of cost-benefit analysis, where QALYs are multipled by a conversion factor, for example $100,000 per QALY, and added to the monetized non-health effects of a policy. Part I of the Article surveys the current literature on QALYs. Part II shows that QALYs can be a more accurate measure of overall well-being than WTP amounts, under certain conditions, and argues that cognitive difficulties interfering with the measurement of WTP amounts can be circumvented by QALYs. Part III describes the limitations of QALYs. Part IV discusses the role that QALYs should play in welfarist policy analysis, given their strengths and limitations. In particular, it presents a pragmatic approach to determining the QALY-to-dollar conversion factor, and sheds new light on the controversy about pricing whole lives versus life-years.

Keywords: cost-benefit analysis, life years, well-being, policy analysis

Suggested Citation

Adler, Matthew D., QALYs and Policy Evaluation: A New Perspective (January 27, 2010). Yale Journal of Health Policy, Law, and Ethics, Vol. 6, pp. 1, 2006; AEI-Brookings Joint Center Working Paper No. 05-01; U of Penn, Inst for Law & Econ Research Paper No. 05-08; U of Penn Law School, Public Law Research Paper No. 61. Available at SSRN: https://ssrn.com/abstract=655865 or http://dx.doi.org/10.2139/ssrn.655865

Matthew D. Adler (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

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