Quality Adjusted Life Years Based on Health and Consumption: A Summary Wellbeing Measure for Cross-Sectoral Economic Evaluation

We introduce a summary wellbeing measure for economic evaluation of cross-sectoral public policies with impacts on health and living standards. We show how to calculate period-specific and lifetime wellbeing using quality-adjusted life years based on widely available data on health-related quality of life and consumption and normative assumptions about three parameters – minimal consumption, standard consumption, and the elasticity of the marginal value of consumption. We also illustrate how these three parameters can be tailored to the decision-making context and varied in sensitivity analysis to provide information about the implications of alternative value judgements. As well as providing a general measure for cost-effectiveness analysis and cost-benefit analysis in terms of wellbeing, this approach also facilitates distributional analysis in terms of how many good years different population subgroups can expect to live under different policy scenarios.