Citation

Hammitt JK. J. Risk Uncertain. 2013; 47(3): 311-325.

Copyright

(Copyright © 2013, Holtzbrinck Springer Nature Publishing Group)

DOI

10.1007/s11166-013-9178-4

PMID

unavailable

Abstract

The value of reducing health and mortality risks is often measured using value per statistical life (VSL) or one of several life-year measures (e.g., life years, quality-adjusted life years, disability-adjusted life years). I derive the utility function that is admissible when preferences for health and longevity, conditional on wealth, are consistent with any life-year measure (LYM) and examine the implications for marginal willingness to pay (WTP) for increases in health, longevity, and current-period survival probability. I conclude that marginal WTP for any LYM is decreasing and that VSL is increasing in the LYM. These results imply that cost-effectiveness analysis using a fixed monetary value per LYM is not consistent with economic welfare theory and that the benefit of a health improvement cannot be calculated by multiplying the change in a LYM by a constant.

Language: en