Valuing Lives Equally and Welfare Economics
AbstractWelfare economics, in the form of cost-benefit and cost-effectiveness analysis, is at present internally inconsistent and ethically unappealing. We address these issues by proposing two ethical axioms: society prefers Pareto improvements and society values lives lived at a "standard" level of health and income equally. We show that there exists a unique social preference ordering satisfying these axioms. Welfare economics is reconstructed to produce rankings consistent with this social preference ordering. The result is we should always measure willingness to pay in life years, not money units. A standardized life year becomes an interpersonally comparable unit of value.
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Bibliographic InfoPaper provided by Program on the Global Demography of Aging in its series PGDA Working Papers with number 2707.
Date of creation: Nov 2007
Date of revision:
aging; health; welfare economics;
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