Abstract
Valuing health outcomes is a fundamental concern in health economics. This article considers a measure of health outcomes: the Quality Adjusted Life Year (QALY). The QALY has been used extensively for two main reasons: (1) it arguably values health outcomes in a more acceptable metric than money does; and (2) it feeds more easily into the wider medical decision-making. To be an acceptable measure of health state preferences, however, the QALY requires a number of restrictive assumptions to hold. We discuss these assumptions and conclude that, if these do not hold, the QALY reverts to a measure of health state rather than to a health state preference.
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McGuire, A. (2018). Health State Evaluation and Utility Theory. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2863
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2863
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