Abstract No health system in the world can provide all patients with the best possible care. Nevertheless, different countries spend different proportions of their gross domestic expenditure on health care – the UK spends 6.9%, Italy 7.6%, France 9.6%, Germany 10.5% and the USA 14.2%. Perhaps the key question is: ‘How much should we spend on health care?’ However, this contribution focuses on the question: ‘Given that there is only a limited amount of money available for health care, how should we spend it?’ Resource allocation decisions involve a bewildering array of possible criteria. Some resource allocation theorists have attempted to formulate general theories or principles that can help us think through allocation decisions. This contribution begins by distinguishing different levels of allocation decision, then examines a hypothetical case study to illustrate the range of factors that can be appealed to in allocation decisions. Three theoretical attempts that have been made to deal with the complexity of allocation factors are also discussed – the quality-adjusted life-year (QALY), lottery theory and needs theory.