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WTP- and QALY-Based Approaches to Valuing Health for Policy: Common Ground and Disputed Territory

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  • Don Kenkel

Abstract

This paper discusses links between two approaches to the value of health: the willingness to pay approach of environmental economics and the quality-adjusted life year approach of health economics. The approaches are used in cost-benefit and cost-effectiveness analyses of health interventions. Despite fundamental differences in the decision contexts and conceptual foundations of the two approaches, in current practice they are likely to lead to similar policy decisions. The paper also shows how research on the quality-adjusted life year (QALY) can be used to fill in gaps in the willingness to pay literature. The paper sketches a simple model that shows how to ``QALY-fy the value of a statistical life;'' i.e., how to combine QALY estimates with estimates of the value of a statistical life to estimate willingness to pay for morbidity risks. Copyright Springer Science+Business Media, Inc. 2006

Suggested Citation

  • Don Kenkel, 2006. "WTP- and QALY-Based Approaches to Valuing Health for Policy: Common Ground and Disputed Territory," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(3), pages 419-437, July.
    • Handle: RePEc:kap:enreec:v:34:y:2006:i:3:p:419-437
    DOI: 10.1007/s10640-006-9003-5
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    3. Leonardo Barcellos de Bakker & Pedro Gasparinetti & Júlia Mello de Queiroz & Ana Claudia Santiago de Vasconcellos, 2021. "Economic Impacts on Human Health Resulting from the Use of Mercury in the Illegal Gold Mining in the Brazilian Amazon: A Methodological Assessment," IJERPH, MDPI, vol. 18(22), pages 1-26, November.
    4. Christian R. C. Kouakou & Thomas G. Poder, 2022. "Willingness to pay for a quality-adjusted life year: a systematic review with meta-regression," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(2), pages 277-299, March.
    5. Kristian Bolin & Lars Forsgren, 2012. "The Cost Effectiveness of Newer Epilepsy Treatments," PharmacoEconomics, Springer, vol. 30(10), pages 903-923, October.
    6. Hammitt, James K. & Haninger, Kevin, 2017. "Valuing nonfatal health risk as a function of illness severity and duration: Benefit transfer using QALYs," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 17-38.
    7. Ahi, Jülide Ceren & Aanesen, Margrethe & Kipperberg, Gorm, 2023. "Testing the sensitivity of stated environmental preferences to variations in choice architecture," Ecological Economics, Elsevier, vol. 205(C).

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    More about this item

    Keywords

    cost-benefit analysis; cost-effectiveness analysis; willingness to pay; QALY; I18; I31; J17;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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