Willingness to pay for a quality-adjusted life year: in search of a standard

Abstract

Cost-benefit analysis (CBA) provides a clear decision rule for interventions, but cost-utility and cost-effectiveness analyses often rely on arbitrary standards to deem programs “cost-effective” due to the reluctance to quantify health benefits in monetary terms. To address this, the authors determined the implied value of a quality-adjusted life year (QALY) based on value-of-life literature and compared it with commonly used cost-effectiveness thresholds. They analyzed 42 estimates of the value of life, classified by method (human capital, contingent valuation, revealed preference/job risk, and revealed preference/non-occupational safety) and origin (U.S. or non-U.S.). After converting estimates to 1997 U.S. dollars, the authors calculated the implied value of a QALY, finding median values significantly higher than typical cost-effectiveness thresholds, particularly for revealed preference methods, suggesting that current thresholds may be too restrictive in evaluating interventions that improve health outcomes.