IDEAS home Printed from https://ideas.repec.org/a/eee/jhecon/v32y2013i1p128-137.html
   My bibliography  Save this article

Capabilities as menus: A non-welfarist basis for QALY evaluation

Author

Listed:
  • Bleichrodt, Han
  • Quiggin, John

Abstract

Quality-Adjusted Life Years (QALYs) are the most widely used measure of health in economic evaluations of health care. Within a welfarist framework QALYs are consistent with people's preferences under stringent assumptions. Several authors have argued that QALYs are a valid measure of health within an extra-welfarist framework. This paper studies the applicability of QALYs within the best-known extra-welfarist framework, Sen's capability approach. We propose a procedure to value capability sets and provide a foundation for QALYs within Sen's capability approach. We show that, under appropriate conditions, the ranking of capabilities can be represented locally by a QALY measure and that a willingness to pay for QALYs can be defined. The validity of QALYs as a general measure of health requires the same stringent conditions as in a welfarist framework.

Suggested Citation

  • Bleichrodt, Han & Quiggin, John, 2013. "Capabilities as menus: A non-welfarist basis for QALY evaluation," Journal of Health Economics, Elsevier, vol. 32(1), pages 128-137.
    • Handle: RePEc:eee:jhecon:v:32:y:2013:i:1:p:128-137
    DOI: 10.1016/j.jhealeco.2012.10.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167629612001579
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jhealeco.2012.10.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert Sugden, 2004. "The Opportunity Criterion: Consumer Sovereignty Without the Assumption of Coherent Preferences," American Economic Review, American Economic Association, vol. 94(4), pages 1014-1033, September.
    2. Brouwer, Werner B.F. & Culyer, Anthony J. & van Exel, N. Job A. & Rutten, Frans F.H., 2008. "Welfarism vs. extra-welfarism," Journal of Health Economics, Elsevier, vol. 27(2), pages 325-338, March.
    3. Wulf Gaertner & Yongsheng Xu, 2006. "Capability Sets as the Basis of a New Measure of Human Development," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 7(3), pages 311-321.
    4. Alan Williams, 1997. "Intergenerational Equity: An Exploration of the ‘Fair Innings’ Argument," Health Economics, John Wiley & Sons, Ltd., vol. 6(2), pages 117-132, March.
    5. Kopylov, Igor, 2009. "Finite additive utility representations for preferences over menus," Journal of Economic Theory, Elsevier, vol. 144(1), pages 354-374, January.
    6. H. Llewellyn-Thomas & H.J. Sutherland & R. Tibshirani & A. Ciampi & J.E. Till & N.F. Boyd, 1982. "The Measurement of Patients' Values in Medicine," Medical Decision Making, , vol. 2(4), pages 449-462, December.
    7. Bleichrodt, Han & Quiggin, John, 1999. "Life-cycle preferences over consumption and health: when is cost-effectiveness analysis equivalent to cost-benefit analysis?," Journal of Health Economics, Elsevier, vol. 18(6), pages 681-708, December.
    8. Andrew M. Jones (ed.), 2006. "The Elgar Companion to Health Economics," Books, Edward Elgar Publishing, number 3572.
    9. Sen, Amartya K, 1979. "Personal Utilities and Public Judgements: Or What's Wrong with Welfare Economics?," Economic Journal, Royal Economic Society, vol. 89(355), pages 537-558, September.
    10. Bleichrodt, Han & Wakker, Peter & Johannesson, Magnus, 1997. "Characterizing QALYs by Risk Neutrality," Journal of Risk and Uncertainty, Springer, vol. 15(2), pages 107-114, November.
    11. Dekel, Eddie & Lipman, Barton L & Rustichini, Aldo, 2001. "Representing Preferences with a Unique Subjective State Space," Econometrica, Econometric Society, vol. 69(4), pages 891-934, July.
    12. Klose, Thomas, 2002. "Life-cycle preferences over consumption and health: a comment on Bleichrodt and Quiggin," Journal of Health Economics, Elsevier, vol. 21(1), pages 161-166, January.
    13. Anand, Paul & Dolan, Paul, 2005. "Equity, capabilities and health," Social Science & Medicine, Elsevier, vol. 60(2), pages 219-222, January.
    14. Puppe, Clemens, 1996. "An Axiomatic Approach to "Preference for Freedom of Choice"," Journal of Economic Theory, Elsevier, vol. 68(1), pages 174-199, January.
    15. Joseph S. Pliskin & Donald S. Shepard & Milton C. Weinstein, 1980. "Utility Functions for Life Years and Health Status," Operations Research, INFORMS, vol. 28(1), pages 206-224, February.
    16. Marc Fleurbaey, 2009. "Beyond GDP: The Quest for a Measure of Social Welfare," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 1029-1075, December.
    17. Richard Cookson, 2005. "QALYs and the capability approach," Health Economics, John Wiley & Sons, Ltd., vol. 14(8), pages 817-829, August.
    18. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    19. Prasanta K. PATTANAIK & Yongsheng XU, 1990. "On Ranking Opportunity Sets in Terms of Freedom of Choice," Discussion Papers (REL - Recherches Economiques de Louvain) 1990036, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    20. Culyer, A J, 1989. "The Normative Economics of Health Care Finance and Provision," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 5(1), pages 34-58, Spring.
    21. Barberà, Salvador & Grodal, Birgit, 2011. "Preference for flexibility and the opportunities of choice," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 272-278.
    22. Bleichrodt, Han & Diecidue, Enrico & Quiggin, John, 2004. "Equity weights in the allocation of health care: the rank-dependent QALY model," Journal of Health Economics, Elsevier, vol. 23(1), pages 157-171, January.
    23. Oliver, Adam, 2003. "A quantitative and qualitative test of the Allais paradox using health outcomes," Journal of Economic Psychology, Elsevier, vol. 24(1), pages 35-48, February.
    24. Hurley, Jeremiah, 2000. "An overview of the normative economics of the health sector," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 2, pages 55-118, Elsevier.
    25. Basu, K. & Pattanaik, P. K. & Suzumura, K. (ed.), 1995. "Choice, Welfare, and Development: A Festschrift for Amartya K. Sen," OUP Catalogue, Oxford University Press, number 9780198287896, Decembrie.
    26. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
    27. Sugden, Robert, 1993. "Welfare, Resources, and Capabilities: A Review [Inequality Reexamined]," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1947-1962, December.
    28. Martin van Hees, 1998. "On the Analysis of Negative Freedom," Theory and Decision, Springer, vol. 45(2), pages 175-197, October.
    29. Xu, Yongsheng, 2003. "On ranking compact and comprehensive opportunity sets," Mathematical Social Sciences, Elsevier, vol. 45(2), pages 109-119, April.
    30. Pattanaik, Prasanta K. & Xu, Yongsheng, 2000. "On Ranking Opportunity Sets in Economic Environments," Journal of Economic Theory, Elsevier, vol. 93(1), pages 48-71, July.
    31. Bernt Christian Brun & Bertil Tungodden, 2004. "Non-welfaristic theories of justice: Is “the intersection approach” a solution to the indexing impasse?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 22(1), pages 49-60, February.
    32. Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
    33. Bleichrodt, Han & Filko, Martin, 2008. "New tests of QALYs when health varies over time," Journal of Health Economics, Elsevier, vol. 27(5), pages 1237-1249, September.
    34. Bleichrodt, Han & Quiggin, John, 2002. "Life-cycle preferences over consumption and health: a reply to Klose," Journal of Health Economics, Elsevier, vol. 21(1), pages 167-168, January.
    35. Brouwer, Werner B. F. & van Exel, N. Job A. & Stolk, Elly A., 2005. "Acceptability of less than perfect health states," Social Science & Medicine, Elsevier, vol. 60(2), pages 237-246, January.
    36. Han Bleichrodt & Jose Maria Abellan-Perpiñan & Jose Luis Pinto-Prades & Ildefonso Mendez-Martinez, 2007. "Resolving Inconsistencies in Utility Measurement Under Risk: Tests of Generalizations of Expected Utility," Management Science, INFORMS, vol. 53(3), pages 469-482, March.
    37. Machina, Mark J, 1982. ""Expected Utility" Analysis without the Independence Axiom," Econometrica, Econometric Society, vol. 50(2), pages 277-323, March.
    38. Oliver, Adam, 2003. "A quantitative and qualitative test of the Allais paradox using health outcomes," LSE Research Online Documents on Economics 155, London School of Economics and Political Science, LSE Library.
    39. John M. Miyamoto & Peter P. Wakker & Han Bleichrodt & Hans J. M. Peters, 1998. "The Zero-Condition: A Simplifying Assumption in QALY Measurement and Multiattribute Utility," Management Science, INFORMS, vol. 44(6), pages 839-849, June.
    40. Han Bleichrodt & John Miyamoto, 2003. "A Characterization of Quality-Adjusted Life-Years Under Cumulative Prospect Theory," Mathematics of Operations Research, INFORMS, vol. 28(1), pages 181-193, February.
    41. Jones, Peter & Sugden, Robert, 1982. "Evaluating choice," International Review of Law and Economics, Elsevier, vol. 2(1), pages 47-65, June.
    42. Joanna Coast & Richard Smith & Paula Lorgelly, 2008. "Should the capability approach be applied in Health Economics?," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 667-670, June.
    43. Marc Fleurbaey, 2005. "Health, Wealth, and Fairness," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(2), pages 253-284, May.
    44. Bleichrodt, Han & Quiggin, John, 1997. "Characterizing QALYs under a General Rank Dependent Utility Model," Journal of Risk and Uncertainty, Springer, vol. 15(2), pages 151-165, November.
    45. Sen, Amartya, 1991. "Welfare, preference and freedom," Journal of Econometrics, Elsevier, vol. 50(1-2), pages 15-29, October.
    46. Wulf Gaertner & Yongsheng Xu, 2008. "A new class of measures of the standard of living based on functionings," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 35(2), pages 201-215, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohammad Abu-Zaineh & Maame Esi Woode, 2018. "Investigating the Dimensions of Youth Wellbeing: An Exploratory Structural Equation Modelling Approach Applied to Palestine," Child Indicators Research, Springer;The International Society of Child Indicators (ISCI), vol. 11(1), pages 57-78, February.
    2. Paul Anand & Laurence S. J. Roope & Anthony J. Culyer & Ron Smith, 2020. "Disability and multidimensional quality of life: A capability approach to health status assessment," Health Economics, John Wiley & Sons, Ltd., vol. 29(7), pages 748-765, July.
    3. Engel, L. & Chudyk, A.M. & Ashe, M.C. & McKay, H.A. & Whitehurst, D.G.T. & Bryan, S., 2016. "Older adults' quality of life – Exploring the role of the built environment and social cohesion in community-dwelling seniors on low income," Social Science & Medicine, Elsevier, vol. 164(C), pages 1-11.
    4. Mitchell, Paul Mark & Roberts, Tracy E. & Barton, Pelham M. & Coast, Joanna, 2015. "Assessing sufficient capability: A new approach to economic evaluation," Social Science & Medicine, Elsevier, vol. 139(C), pages 71-79.
    5. Pickles, Kristen & Lancsar, Emily & Seymour, Janelle & Parkin, David & Donaldson, Cam & Carter, Stacy M., 2019. "Accounts from developers of generic health state utility instruments explain why they produce different QALYs: A qualitative study," Social Science & Medicine, Elsevier, vol. 240(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Barbera, S. & Bossert, W. & Pattanaik, P.K., 2001. "Ranking Sets of Objects," Cahiers de recherche 2001-02, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    2. Coast, Joanna & Smith, Richard D. & Lorgelly, Paula, 2008. "Welfarism, extra-welfarism and capability: The spread of ideas in health economics," Social Science & Medicine, Elsevier, vol. 67(7), pages 1190-1198, October.
    3. Hougaard, Jens Leth & Moreno-Ternero, Juan D. & Østerdal, Lars Peter, 2013. "A new axiomatic approach to the evaluation of population health," Journal of Health Economics, Elsevier, vol. 32(3), pages 515-523.
    4. Mitchell, Paul Mark & Roberts, Tracy E. & Barton, Pelham M. & Coast, Joanna, 2015. "Assessing sufficient capability: A new approach to economic evaluation," Social Science & Medicine, Elsevier, vol. 139(C), pages 71-79.
    5. Xu, Yongsheng, 2003. "On ranking compact and comprehensive opportunity sets," Mathematical Social Sciences, Elsevier, vol. 45(2), pages 109-119, April.
    6. Prasanta Pattanaik & Yongsheng Xu, 1998. "On Preference and Freedom," Theory and Decision, Springer, vol. 44(2), pages 173-198, April.
    7. Wulf Gaertner, 2012. "Evaluating sets of objects in characteristics space," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(2), pages 303-321, July.
    8. Jun Matsuyama & Kenji Mori, 2010. "Freedom and achievement of well-being in the adaptive dynamics of capabilities," TERG Discussion Papers 252, Graduate School of Economics and Management, Tohoku University.
    9. Paul Anand & Laurence S. J. Roope & Anthony J. Culyer & Ron Smith, 2020. "Disability and multidimensional quality of life: A capability approach to health status assessment," Health Economics, John Wiley & Sons, Ltd., vol. 29(7), pages 748-765, July.
    10. Martin Hees, 2010. "The specific value of freedom," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 35(4), pages 687-703, October.
    11. Pattanaik, Prasanta K. & Xu, Yongsheng, 2000. "On Ranking Opportunity Sets in Economic Environments," Journal of Economic Theory, Elsevier, vol. 93(1), pages 48-71, July.
    12. Agee, Mark D. & Crocker, Thomas D., 2013. "Operationalizing the capability approach to assessing well-being," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 46(C), pages 80-86.
    13. Attema, Arthur E. & Brouwer, Werner B.F. & l’Haridon, Olivier, 2013. "Prospect theory in the health domain: A quantitative assessment," Journal of Health Economics, Elsevier, vol. 32(6), pages 1057-1065.
    14. Antoinette Baujard, 2006. "Conceptions of freedom and ranking opportunity sets. A typology," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 200611, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    15. Gaetano Gaballo & Ernesto Savaglio, 2012. "On revealed diversity," Working Papers 254, ECINEQ, Society for the Study of Economic Inequality.
    16. Han Bleichrodt & Jose Luis Pinto, 2012. "Conceptual Foundations for Health Utility Measurement," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 35, Edward Elgar Publishing.
    17. Arlegi, R. & Dimitrov, D.A., 2004. "On Procedural Freedom of Choice," Discussion Paper 2004-9, Tilburg University, Center for Economic Research.
    18. Gekker, Ruvin & Piggins, Ashley, 2009. "Evaluating Opportunities When People are Uncertainty Averse," The Economic and Social Review, Economic and Social Studies, vol. 40(1), pages 109-116.
    19. Simon, Judit & Anand, Paul & Gray, Alastair & Rugkåsa, Jorun & Yeeles, Ksenija & Burns, Tom, 2013. "Operationalising the capability approach for outcome measurement in mental health research," Social Science & Medicine, Elsevier, vol. 98(C), pages 187-196.
    20. Yongsheng Xu & Naoki Yoshihara, 2022. "Bargaining theory over opportunity assignments and the egalitarian solution," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 198-219, February.

    More about this item

    Keywords

    Capability approach; QALYs; Menu-dependent choice;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:32:y:2013:i:1:p:128-137. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505560 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.