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Utilitarian or Quantile-Welfare Evaluation of Social Welfare? With Application to Health Cost-Effectiveness Analysis

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  • Charles F. Manski
  • John Mullahy

Abstract

This paper considers quantile-welfare evaluation of social welfare as an alternative to utilitarian evaluation. Maximization of quantile utility has previously been studied as a model of individual decision making under uncertainty, whose properties differ from maximization of expected utility. Particularly noteworthy is that individual maximization of quantile utility requires only an ordinal formalization of utility, not a cardinal one. This paper concerns analysis of social planning rather than individual decision making. We first summarize basic welfare-economic properties of quantile welfare in general terms. We then turn attention to health cost-effectiveness analysis and consider measurement and econometric issues arising in this important applied context. We propose a procedure to nonparametrically bound the quantile welfare of health states using data from binary-choice time-tradeoff (TTO) experiments of the type regularly performed by health economists.

Suggested Citation

  • Charles F. Manski & John Mullahy, 2025. "Utilitarian or Quantile-Welfare Evaluation of Social Welfare? With Application to Health Cost-Effectiveness Analysis," NBER Working Papers 34247, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34247
    Note: EH PE
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    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

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