RATIONAL AND SOCIAL CHOICE Part 10 ppt

530 aki tsuchiya and john miyamoto such respondents “informed non-patients”. The informed non-patient is assumed to know about ill health states, but he himself is not ill; he is assumed to be rational and selfish. It may be feasible to try to contrast the capable patient values and the informed non-patient values in a manner parallel to the contrast between experienced utility and decision utility (Kahneman et al. 1997). While all four concepts are about how states of ill health are perceived, capable patient values and experienced utility are concerned with how things actually feel in real time when the individuals are living with the condition in question, whereas informed non-patient values and decision utility capture how people think they would feel were they to experience these states. In other words, the informed non-patient corresponds to the consumer before consumption, contemplating consumption of a good, and the competent patient corresponds to the consumer after consumption, having purchased the good. While using the values obtained from informed non-patients is closer to the framework of consumer theory based on decision utility, in a move parallel to the emergence of interest in experienced utility in the recent economics literature, there is an emerg- ing interest in values obtained from competent patients in the health economics literature (Brazier et al. 2005). 22.2.2 Non-Welfarism and the QALY as the Desideratum On the other hand, there is an alternative approach within health economics which holds the QALY as the social desideratum not because it is valued by individuals as patients or consumers (although it may well be), but because it is valued by the public at large or the relevant decision-makers (e.g. policymakers in the National Health Service or the Department of Health). This approach has been referred to as “the decision-makers’ approach” (Sugden and Williams 1978), or “extra-welfarism” (Culyer 1989). While some authors distinguish between the two, here they are not distinguished from each other and are collectively referred to as “non-welfarism” (Tsuchiya and Williams 2001). The common tenet of these is that social welfare in the context of public policy decision-making is not a function of the utility enjoyed by constituent individuals of society as judged by themselves, but a function of social desiderata, dictated by the relevant policy context. In the context of public health policy, the desideratum is population health, as operationalized by the QALY. This is because the objective of the heath-care system is to make people healthier, not to make people happier (see Feldstein 1963). This is in contrast to welfarism (Section 22.2.1 above), where health was the desideratum precisely because and to the extent that individuals as patients or consumers appreciate it (see Pauly 1994). On the other hand, the non-welfarist interpretation of the QALY has been compared to Sen’s concept of capabilities (Cookson 2005). Since the QALY does not represent individual utility, the term “cost–utility analysis” becomes unsuitable. social choice in health and health care 531 The non-welfarist approach also follows the linear QALY model: W(Y, Q)=Y · H S (Q), where W is the social welfare function over life-years (Y ) and HRQOL (Q), and H S is a function reflecting the societal value of different health states. This linear QALY model corresponds to the standard QALY model under welfarism above. Therefore, the same set of conditions as applies to H I also applies to H S ; i.e. mutually inde- pendent social value of duration and health quality, constant proportional time tradeoff, and risk neutrality with respect to duration. Similarly, the non-welfarist QALY is cardinal and interpersonally comparable. Interpersonal comparability is less problematic under non-welfarism than under welfarism, since it is down to what the relevant decision-maker wants. It is a matter of choice for the decision- maker to set equal values across individuals for full health and for dead, and to set an equal value for a year of survival in full health. Regarding the method of assessing HRQOL, non-welfarism argues that, since in a publicly funded health-care system it is ultimately about how to use tax moneys, it should be based on what members of the tax-paying citizenry think about different health outcomes across society; in other words, the judgment should come from a citizen, or societal perspective. 1 Let us call the individual in this context the “informed citizen”. The informed citizen is assumed to know what it feels like to have different health problems, to be rational, and to be selfless in the sense that she will not make judgments in order to forward her own case, or to advance the case of one particular health problem over another (see e.g. Gold et al. 1996). In other words, the informed citizen corresponds to a variant of the planner or the ethical impartial observer. Note that informed citizens are in effect the same people as competent patients or informed non-patients, but they assess health states from different perspectives. The capable patient can also be the informed citizen by adopting the appropriate perspective. Consequently, the same valuation methods, such as standard gamble and time tradeoff, can be used to elicit values from the societal perspective. For instance, participants can be asked to imagine a group of a certain number of unnamed individuals and asked to make a choice for them between survival in state X for certain and a gamble between survival in full health and death; or between survival in state X for a fixed number of years and survival in full health for a shorter duration. 1 Note that some authors use the term “societal perspective” to mean the remit of an economic analysis. For example, an analysis carried out from the perspective of a specific health-care institution (say the national health service or a hospital) will be different from one carried out from the societal perspective, covering all costs and all benefits regardless of to whom they accrue. Here, the term “societal perspective” is used to mean the citizen perspective, as opposed to the individual, consumer perspective. 532 aki tsuchiya and john miyamoto Some authors have associated cost–benefit analysis with welfarism, and cost per QALY analysis with non- (or extra-)welfarism (Culyer 1989; Hurley 2000). However, and first, as we saw in Section 22.2.1 above, there is a thriving literature on the welfarist conceptualization of the QALY, which implies that cost per QALY analysis is compatible with welfarism. Second, there are not many actual HRQOL valuation studies that use the citizen perspective. For example, the time tradeoff exercise used in the well-established health state classification instrument EQ-5D asked whether the respondents themselves preferred to live life A (a longer life in less than full health) or life B (a shorter life in full health) (Dolan 1997), which assumes that the respondents are informed non-patients, and therefore welfarist. The only set of HRQOL weights that currently exists that is non-welfarist is likely to be the Disability Weights, developed for use in the calculation of the global burden of disease (World Bank 1993), based on the person tradeoff method (Nord 1995). The person tradeoff method asks respondents to choose between two groups of people, where she does not belong to either group. For example, one group may consist of 1000 people who, if chosen, will live for a fixed period of time in state X and then die, whereas the other group consists of n people who, if chosen, will live for the same duration in full health and then die. Those in the unchosen group will all die within a few days. The value associated with X relative to full health and dead can be inferred from the level of the number of people, n, that makes the respondent indifferent between choosing either group. The welfarist’s concern over non-welfarism is the legitimacy of the informed citizen as a source of value. If the personal preferences of the capable patient were to clash with the judgments of the informed citizen, why should the latter view be given any more weight than the former view? For example, if people with chronic health problems learn to adapt to their state, then their valuation of their own health state as capable patients may be much higher than how an informed citizen with no direct long-term experience of the health problem may value the same state. Who is to say the informed citizen’s value is “correct” and the competent patient’s value is “wrong”? The non-welfarist’s reply to this is likely to be along the following lines. First, it is not an issue of which values are “correct” and which ones “wrong”. The two parties have different values and preferences. The issue is which value is the more appropriate to use. Second, if the debate is set against a freely competitive health-care market, where the competent patient is paying out of their own pocket for their own health care, then their own marginal utility should be a key variable determining consumption. However, third, if the debate is set in the context of a publicly funded health-care system, this brings in two additional considerations. The main objective of a publicly funded health-care system is not merely to pursue the most efficient ways in which to facilitate individuals maxi- mizing their own personal utility. As was noted above, publicly funded health-care systems are typically concerned with improving population health as opposed to personal utility, and with improving equity as well as efficiency. Governments are social choice in health and health care 533 concerned not only about the inefficiency of a possible health-care market. This requires a perspective that is detached from the individual as the selfish utility maximizer. 22.3 The Aggregation Rule The key issues addressed in this section are: what the aggregation rule should be, and, if nonuniform weights are involved, how are they to be justified, and how are they to be determined. Aggregation rules do not preclude any particular desideratum, but may have higher affinity with either welfarism or non-welfarism. 22.3.1 The Simplest Aggregation Rule: Total Sum with Uniform Weights The simplest aggregation rule 2 is to add up the changes in the desideratum across individuals without any weights (or, equivalently, with uniform weights) so that the outcome with the largest total is recognized as the best outcome. This aggre- gation rule is applicable to both welfarism and non-welfarism, and in effect this is how the benefits are calculated in cost per QALY analyses. Although the use of uniform weights is the simplest approach to aggregation, and it may seem to be the obvious default choice, this does not mean that it needs no justification. Under non-welfarism, equal weights can be justified with reference to what the relevant policymakers think or what members of the public as informed citizens support from the societal perspective. A less simple issue is how to justify the use of uniform weights under welfarism. Equal weighting can be inferred from a “permutation axiom” that was proposed by Camacho (1979, 1980) in his repetitions approach to the foundations of cardinal utility. In the repetitions approach, the individual is asked to state preferences for arbitrarily many repetitions of the same riskless choice, e.g. the choice of wine at a given restaurant, at the same table, with the same menu, with the same com- pany, etc. The permutation axiom states that “the satisfaction derived from a finite sequence of choices depends only on the choices entering the sequence and not on the order in which they appear” (Camacho 1980,p.364; emphasis original) 2 By far the least restrictive social decision rule says that nobody should lose or be made worse off (viz. the Pareto criterion), and it is applicable under either welfarism or non-welfarism. However, it is not the most useful rule, since it is highly incomplete (i.e. there will be multiple outcomes that cannot be rank-ordered against each other). It is rare that actual policy decisions can be justified with reference to the Pareto criterion. 534 aki tsuchiya and john miyamoto As Wakker pointed out (personal communication to JM), the choices could be interpreted as the outcomes for different individuals in a society rather than as outcomes of a series of repetitions of the same choice. The social welfare version of the permutation axiom would then state that the level of social welfare derived from a finite set of outcomes across individuals who are equal in all relevant respects depends only on the outcomes in the set and not on the particular pattern of distribution of these outcomes across the individuals. The sameness of the choice in the original axiom will translate into the individuals being equal in all relevant aspectsinthissocialversion. So, for example, the aggregation process should be indifferent between an out- come where you are very sick and I am healthy, and an outcome where I am very sick and you are healthy. Thus, equal weighting in aggregation can be linked to more basic preference assumptions. The next challenge for welfarism then becomes who decides, and how, whether or not different people are equal in all relevant respects. 22.3.2 The Introduction of Inequality Aversion, or Distributional Weights If there is aversion to unequal distributions of the desideratum across people who are equal in all relevant respects, then the aggregation rule can incorporate inequal- ity aversion so that the marginal societal value of increased desideratum is greatest when it goes to the worst-off individuals. This aggregation rule is blind to the char- acteristics of the individuals, and simply has the effect of equalizing the distribution of outcomes. Under non-welfarism, the degree of inequality aversion can be derived from the informed citizen or policymakers, by using valuation methods that trade off benefits. For example, they will present two or more groups of patients and contrast outcomes that have larger total health (in terms of unweighted QALYs) but with less equal distribution of this, and those that have smaller total health but with more equal distribution of this. To illustrate, suppose two groups of equal size: A and B. In outcome 1, those in A can expect to live 70 QALYs and those in B can expect to live 80 QALYs. In outcome 2,thoseinAcanexpecttolive73 QALYsandthoseinBcanexpectto live 74 QALYs. If efficiency is measured by the sum of the levels of the desideratum across the two groups, and if equality is measured by the difference in the levels of the desideratum across the two groups, then outcome 1 is relatively more efficient and relatively less equal, whereas outcome 2 is less efficient and more equal. The aim would be to present different combinations of levels of the desideratum, in order to ascertain the amount of efficiency that people are willing to forgo to obtain an equal distribution of this. More specifically, suppose the median individual (or mean preference) is indifferent between the two outcomes above. Then by specifying an objective function (e.g. one with a constant elasticity of substitution between social choice in health and health care 535 marginal health improvements between the two groups), the implied degree of inequality aversion can be derived corresponding to this particular individual, or preference (Williams et al. 2005). This will allow the identification of the implied equally distributed health equivalent, and the calculation of relative weights that should be applied to marginal health changes to different people based on the marginal rate of substitution between the health of the two groups. An alternative approach is to base the social objective function on the rank-dependent utility model (Bleichrodt et al. 2004; Bleichrodt et al. 2005). The measurement of inequality aversion above is similar to the way that risk aversion is measured, with probabilities associated with different outcomes replaced withtheproportionofpeopleassociatedwithdifferent outcomes. In the context of personal utility, a risk-averse individual will feel safer in a world with less inequality than more, because this suggests less variability in possible outcomes for herself. For this reason, various mechanisms have been proposed under which preferences of selfish individuals faced with uncertainty over their future prospects are interpreted as representing aversion to inequality across different individuals within the society. However, when individuals have personal utility as consumers over possible out- comes for themselves, this represents the level of risk aversion of the personal utility function, which is distinct from societal preferences that individuals as citizens may have over possible distributions across different individuals in society. And it is this latter preference that represents the level of inequality aversion of the social objective function. To illustrate the distinction, think of the case where there is a disease with an incidence rate, p. Those individuals who are hit by the disease will be in poor health, and those who are not affected will be in good health. In this case, individual risk can be translated into a distribution at the population level. However, think of another case where there are two states of the world; endemic and no endemic. If endemic happens with probability p, then everybody will be in poor health, and if no endemic happens, then everybody will be in good health. In this case, the risk to the individual may not translate into distribution at the population level. Let us assume, for the sake of the argument, that the impact of poor health is short- lasting, that people achieve full recovery within a couple of days, and that overall it has no long-term impact on the economy. From the point of view of an entirely selfish consumer, the individual incidence case and the endemic case are the same; they will be in poor health with probability p, and otherwise in good health. At the social level, whereas a risk-averse and distribution-neutral social objective function will be indifferent between the two cases, a risk-neutral and inequality-averse social objective function will rank the second case higher. Since the capable patient and the informed non-patient are selfish, although they may well be risk-averse, they are less suited to be a source for determining the level of inequality aversion to use in aggregation. As such, this aggregation rule, which incorporates weights to reflect aversion to inequality, has higher affinity with 536 aki tsuchiya and john miyamoto non-welfarism (which is based on the societal perspective and the social welfare function) than welfarism (which is based on the individual consumer perspective and the personal utility function), not because welfarism is incompatible with unequal weights, but because welfarism cannot determine the level of inequality aversion beyond individual risk aversion. As an alternative approach, by rephrasing risk aversion as diminishing mar- ginal utility of income, or of QALYs, at the individual level, and by assuming an inequality-neutral aggregation rule, social welfare will be improved more by allocating additional income to the poor, or additional QALYs to the poorly, so that the effects of inequality aversion are achieved. Nevertheless, while the effects are similar, the underlying reasons are completely different. With this approach, equality is achieved as a side product of efficiency. There have been further attempts to incorporate inequality aversion into welfarism: for instance, by defining distri- butional weights so that the marginal social value of personal utility is decreasing in own income, or health. The difficulty is, as long as one stays within a welfarist framework, it is not obvious who determines this weight, and how. 22.3.3 The Introduction of Equity Weights, and Efficiency Weights Within non-welfarism, if there is some notion of equity or justice that the informed citizen, or policymaker, supports, then the aggregation rule can include “equity weights”. For example, ceteris paribus, if a severe health problem is regarded as deserving of higher priority than mild health problems, then this can be incorpo- rated. Other candidate considerations may include expected health outcome with treatment, age, cause of the ill health, etc. (See Dolan et al. 2005 for a review of empirical studies, and Dolan and Tsuchiya 2006 for an overview.) Elicitation of equity preferences is an area where it is important to probe the reasons why people support differential treatment of fellow citizens depending on their characteristics. Contrast this with typical welfarist utility assessments by standard gamble or time tradeoff methods—rarely are respondents asked why they give the responses that they give. When eliciting equity weights, researchers need to distinguish between justifiable societal preferences and unacceptable views based on prejudices (e.g. differential treatment by “irrelevant” characteristics such as race, sexual orientation, or religion). This has led to the use of qualitative methods, typically in discussion group settings, where participants are invited to exchange views and explain why people with one characteristic should be given higher or lower priority than others. This process is useful in ascertaining that the citizen perspective, as opposed to the consumer perspective, is being used by participants. social choice in health and health care 537 Since qualitative studies do not generate specific, quantitative values for weights, they must be followed by quantitative elicitation exercises. These have often used the person tradeoff method explained above, or the benefit tradeoff method (see Tsuch iya et al. 2003 for an example). Benefit tradeoff questions are similar to person tradeoff questions, but vary the size of the benefit instead of the number of people so as to reach a point of indifference between the two groups; obviously, it cannot be used for HRQOL valuation, but it can be used to elicit the relative val- ues of different population characteristics. Moreover, adaptations of conventional methods (e.g. standard gamble and time tradeoff, using scenarios for groups of patients as opposed to individual respondents themselves) are possible. The key in all such cases would be to adopt a societal perspective. Respondents would be asked to behave as informed citizens who disregard information relevant to their own situation and personal preferences, but retain general understanding of the ways and the values of their society, as in the “thin” veil of ignorance. Alternatively, they could be asked to imagine themselves as committee members with the task of making the best decision for society, detaching themselves from their own personal interests. The obvious issue regarding this exercise is the ex- tent to which actual elicitation exercises can be made genuinely disinterested and fair. Treating some people rather than others can also have knock-on effects in terms of efficiency. For instance, in a serious crisis it makes more sense to save the life of a self-supporting adult than that of an elderly person or a young child who will need support from others to survive further. The above non-welfarist framework for deriving equity weights could also be used for deriving “efficiency weights”, where a QALY accruing to individuals of a more “important” group within the population is given a larger weight than the rest. As with the elicitation of equity preferences, there will be concerns over the process of weighing the importance of the health and survival of various people and trying to attach relative efficiency weights to them. If such weights are to be incorporated in cost per QALY analyses, they also need to be based on a non-welfarist approach, where values of the informed citizen are elicited from an impartial and detached perspective. Again, since welfarism is embedded in the selfish consumer’s utility, it is difficult toseehowequityweightsorefficiency weights can be set in a fair manner. A possible challenge to this might be that there is nothing intrinsically wrong with using selfish consumers’ utilities as one input, but not necessarily the sole input, to the analysis; and this may well be the case. The issue then is, if personal utility is not the sole input, then where are the other inputs to come from? At some point in the process of deriving these weights, there needs to be consideration of whose well-being should count more or less compared with others, and by how much, and if this judgment istobefair,thenitcannotbelefttoselfishagents.Thejudgmentneedstobemade by disinterested parties—in other words, from the non-welfarist perspective. 538 aki tsuchiya and john miyamoto 22.4 Concluding Remarks The intellectual backdrop against which a large part of economic evaluation of health-care interventions is carried out is one where putting a monetary price tag on human life and health is often categorically regarded as immoral and unacceptable. Economists could go into long lectures beginning with the concept of opportunity cost, followed by how introducing a monetary value of health is unavoidable, and how failing to do so will lead to wasteful use of limited resources and thus to fewer lives saved and less health recovered, which, presumably, will also be immoral and unacceptable, if not more so. In the real world, practicing health economists have instead introduced a form of economic evaluation that does not explicitly introduce monetary values of health within the analysis. This, obviously, does not avoid the issue of the monetary value of health altogether, since it comes back in the form of a threshold cost per QALY amount, beyond which an intervention will be regarded as not cost-effective enough to be funded. For non-welfarist health economists, this is largely an acceptable state of affairs, since it is relatively straightforward to accept the number of QALYs gained as the distribuendum. Welfarist health economists, on the other hand, have two choices. One is to argue for cost–benefit analyses, which have a more solid theoretical foun- dation in welfare economics, and are less restrictive in many respects. The other is to explore a welfarist interpretation of cost per QALY analyses, and of the concept of the QALY. But why bother with the QALY in the first place? What is the attraction of the QALY to a welfarist, when the restrictions imposed on personal utility func- tions are more severe compared with representing the value of health in monetary terms? There may be two possible motivations for this second enterprise, exploring a welfarist foundation for QALYs. One, the more likely of the two, is the practical element, that most economic evaluations of health-care interventions are carried out in the form of cost per QALY analyses, and that there are few cost–benefit analyses by comparison. Given that the health-care sector is a significant player in the economy, there should be a way to understand how choices are made in this sector from a welfarist perspective. The other, more speculative motivation could be the very way in which the QALY requires restrictive assumptions. While welfarism may struggle to incorporate inequality aversion and equity weights into the health- related social welfare function, standard unweighted cost per QALY analyses imply one important condition: viz. that everybody’s QALY counts the same, regardless of who they are. In this respect, it is highly egalitarian compared with, for example, a compensating variation for changes in one’s own health, which will most certainly be a function of disposable income. Pure welfarism has low affinity with equity, but welfarists need not be anti-equity. 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The website of the Human Development and Capability Association (<www.capabilityapproach.com>). Equity and Equality in Health and Health Care. Journal of Health Economics, 12, 431–57. Laver s ,R.J.,andWilliams,A.(1971). Social Indicators: Health. Social Trends, 2, 31–42. Daniels, N., and Sabin,J.(1997) probability p, and otherwise in good health. At the social level, whereas a risk-averse and distribution-neutral social objective function will be indifferent between the two cases, a risk-neutral and inequality-averse