Hausman: Evaluating Health Consequences: HALYs vs. WTP
Author(s)
Hausman, Daniel, M.
Abstract
This paper will raise questions about the attempt to monetize the costs and benefits of regulations and policies. It points out the risk that numbers will carry the day and moral factors will be ignored or, conversely, that moral factors govern without serious attention to the magnitudes of benefits and costs. Another risk is the identification of benefits with the satisfaction of preferences, while preference satisfaction is measured by willingness to pay (WTP). When the health measure is independent of individual traits such as wealth, expected income, or risk aversion, one moves away from the objective of satisfying actual preferences, as these would be expressed in the market. One can also diminish the knowledge needed to estimate the value of future health profiles and lessen the biases in individual expectations by imposing constraints on valuations similar to those built into HALYS. Each such mitigation is a step away from the goal of mimicking the market; however public policy should be responsive to public values and individual goods and harms rather than aiming to expand the influence of the factors that drive markets.
