Valuing non-fatal health risks: Monetary and health-utility measures

Abstract

Metrics for valuing environmental, health, and safety policies should be consistent with both the preferences of affected individuals and social preferences for distribution of health risks in the population. Two classes of metrics are widely used: monetary measures (e.g., willingness to pay) and health-utility measures (e.g., quality-adjusted life years (QALYs), disability-adjusted life years (DALYs)), both of which are summed across the population. Health-utility measures impose more structure than monetary measures, with the result that individuals' preferences often appear inconsistent with these measures; for the same reason, health-utility measures help protect against cognitive errors and other sources of incoherence in valuation. This paper presents theoretical and empirical evidence comparing these metrics and examining how they co-vary.