The ‘well-being valuation method’ is a recently developed technique for valuing the effect, in monetary terms, of a health problem on an individual’s well-being. The method involves calculating the compensating variation necessary to maintain the same level of well-being after suffering from a particular health problem, and is hoped to offer a solution to the problems of revealed preference and contingent valuation methods. A recent IZA paper investigated whether there was consistency in well-being measures for valuations of different health problems. The authors find (as might be expected) that different well-being measures give very different results. This post is inspired by the paper.
Solution?
Monetary valuation of health problems is certainly a decision-makers dream. If done right it would also be a health economist’s dream. The QALY was developed as a substitute currency for health, as money was not deemed appropriate and willingness to pay and accept methods are notoriously biased, controversial and inconsistent. The well-being valuation approach has the potential to allow us to scrap this stand-in currency by using ‘The Leydon Approach‘ and aiming questions about health problems at a representative sample of the public. Using this method we can figure out the value that individuals assign to losses in well-being associated with particular health problems and can thus decide whether a particular intervention represents good value for money. This method can also, very easily, provide different values for people with different socio-demographics.
Convolution?
In calculating QALYs there is some consensus in the use of generic preference-based measures of health-related quality of life. The well-being measure that should be used in the well-being valuation approach is unclear and, as the recent IZA paper showed, different measures give different results. And besides, is this even the direction in which health economics should be heading? Wouldn’t we be better-off adapting the QALY method and possibly working harder to assign monetary values to QALYs? Using willingness to pay methods this is not something which is really possible at the moment, due to numerous methodological problems. However, this is not to say we shouldn’t still be trying to do this using different methods. There are also massive equity concerns when we start assigning monetary values to health problems, as different people value money differently; arguably not in a way that is representative of underlying preferences for health.
Personally I think that the well-being valuation approach is, in principle, a potentially great new idea for the health economics field to adopt. It seems particularly relevant to the current debate in the UK over value-based pricing. However, I have many reservations over the direct monetary valuation of health problems as they are currently carried out. I would like to see a future analysis in the literature of the implications for equity issues of using the well-being valuation approach instead of QALYs. With the piece of mind that these methods can provide equitable outcomes I feel this new method could (and possibly should) be adopted more widely.
Please provide your thoughts on this subject using the comments box below. Also, please highlight any literature relevant to this debate.
[…] of this blog’s first ever posts was on the subject of ‘the well-being valuation approach‘ but, to date, I don’t think we’ve ever covered a study in the round-up that uses this […]
[…] of this blog’s first ever posts was on the subject of ‘the well-being valuation approach‘ but, to date, I don’t think we’ve ever covered a study in the round-up that uses […]
I think a key issue with any valuation method is the consistency of its application across studies. Coming from a cost-utility analysis perspective, that comparability between evaluations is crucial for decision making. So my concerns with the WBV method are to do with the transition to it as the dominant method (if that happens); how we can interpret QALY based evaluations in the light of this new method; and harmonisation of a gold standard WBV technique (internationally ideally). I predict an evolved QALY to be the standard in 10 years time.
This is a very intresting post and not something I’d really seen before as I’ve little experience working with ‘the well being approach’. I think all the different approaches that are currently arising out of health economics are fascinating and I do wonder in which direction mainstream health economics will go. I know that up North at the University of Birmingham and Sheffield they are currently doing work on capabilities as a divergence from the standard QALY approach in order to increase the evaluative space and this method here outlines another possible direction. On a subjective note….given QALYs current dominance, the current development of capabilities into an operable measure and the emergence of the wellbeing measure…where do you see health economics in ten years time? QALYs/Capabilities/Well being? Given their current weight (metaphorical) you have to feel the QALY is going to be hard object to budge!