Longevity bias in cost‐effectiveness analysis

descriptionPublicationkeyboard_double_arrow_right Article , Other literature type 01 Jan 2006 English Publisher:WileyJournal:Health Economics, volume 17, pages 523-534 (issn: 1057-9230, eissn: 1099-1050,

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Authors: Liqun, Liu; Andrew J, Rettenmaier; Thomas R, Saving;

doi: 10.1002/hec.1309 , 10.2139/ssrn.991857

pmid: 17990284

Longevity bias in cost‐effectiveness analysis

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Abstract

AbstractWe use a simple lifetime utility maximization model to study the problem of medical resource allocation. This model leads to a welfare specification with a QALY (quality‐adjusted life‐year) component that captures an individual's preferences over both life expectancy and health status. The goal of medical cost‐effectiveness analysis (CEA) is characterized as maximizing the QALY measure for a given total medical expenditure. We show that the CEA with such a goal has a longevity bias: the CEA‐based division of a given total medical expenditure between extending life and improving health gives the former a larger share than is called for by welfare maximization. Copyright © 2007 John Wiley & Sons, Ltd.

Related Organizations

The University of Texas System
United States
Texas A&M University
United States

Keywords

Health Care Rationing, Cost-Benefit Analysis, Health Status, Longevity, Life Expectancy, Bias, Humans, Quality-Adjusted Life Years, Models, Econometric

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