Resource Pack: Valuing Health and Longevity in BCA

This resource pack, curated by the Center for Health Decision Science, introduces the valuation of changes in health and longevity in benefit-cost analysis. It is targeted towards advanced students and practitioners who have a basic understanding of the benefit-cost analysis framework, as discussed in the Resource Pack: Introduction to Benefit-Cost Analysis. That pack provides a general overview of the approaches that are explored in more detail here, as well as related guidance documents.

This pack includes selected articles, reports, and other resources that describe the basic concepts, review the literature, and discuss values recommended for application in different contexts. These resources provide a starting point for further exploration and include cites to numerous additional primary research studies and related work. The resources are likely to be useful to those teaching benefit-cost analysis at an undergraduate or graduate level.

In benefit-cost analysis, impacts are valued in monetary units, including both health and non-health outcomes. Value is derived from individual preferences. It is defined by the willingness of the individuals affected by a policy to exchange money for the benefits each would receive. Spending to improve health and longevity means that individuals – and the society of which they are a part – will have fewer resources available to spend on other things.

Typically, the impacts of a policy on health or longevity are estimated as a change in morbidity or mortality risk that accrues throughout an affected population. Valuation is based on individual willingness to pay for the small risk changes each will experience (such as a 1 in 10,000 or 1 in 100,000 reduction in the risk of illness or death), aggregated across the population. The values are often described as the value per statistical case (VSC) for nonfatal risks and the value per statistical life (VSL) for fatal risks.