New Tests of QALYs When Health Varies Over Time

Abstract

This paper performs new tests of the QALY model when health varies over time. Our tests do not involve confounding assumptions and are robust to violations of expected utility. The results support the use of QALYs at the aggregate level, i.e. in economic evaluations of health care. At the individual level, there is less support for QALYs. The individual data are, however, largely consistent with a more general QALY-type model that remains tractable for applications.

Keywords: QALYs, economic evaluation of health care, decision under risk, nonexpected utility

JEL Classification: I10