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health state evaluation and utility theory

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  • Alastair McGuire

Abstract

Valuing health outcomes is a fundamental concern in health economics. This article considers a measure of health outcomes: the Quality Adjusted Life Year (QALY). The QALY has been used extensively for two main reasons: (1) it arguably values health outcomes in a more acceptable metric than money does; and (2) it feeds more easily into the wider medical decision-making. To be an acceptable measure of health state preferences, however, the QALY requires a number of restrictive assumptions to hold. We discuss these assumptions and conclude that, if these do not hold, the QALY reverts to a measure of health state rather than to a health state preference.

Suggested Citation

  • Alastair McGuire, 2013. "health state evaluation and utility theory," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
  • Handle: RePEc:pal:dofeco:v:7:year:2013:doi:3904
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    More about this item

    Keywords

    Disability Adjusted Life Years (DALY); Quality Adjusted Life Year (QALY); social policy; utility theory; Years of Healthy Life (HYL);
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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