title: Longevity bias in cost-effectiveness analysis.
abstract: We use a simple lifetime utility maximization model to study the problem of medical resource allocation. This model leads to a welfare specification with a QALY (quality-adjusted life-year) component that captures an individual's preferences over both life expectancy and health status. The goal of medical cost-effectiveness analysis (CEA) is characterized as maximizing the QALY measure for a given total medical expenditure. We show that the CEA with such a goal has a longevity bias: the CEA-based division of a given total medical expenditure between extending life and improving health gives the former a larger share than is called for by welfare maximization.
authors.affiliation: Private Enterprise Research Center, Texas A&M University, College Station, TX 77843-4231, USA. lliu@tamu.edu
authors.forename: Liqun
authors.initials: L
authors.lastname: Liu
authors.forename: Andrew J
authors.initials: AJ
authors.lastname: Rettenmaier
authors.forename: Thomas R
authors.initials: TR
authors.lastname: Saving
mesh_terms: D015982:Bias; D003362:Cost-Benefit Analysis; D015276:Health Care Rationing / Q000191:economics*; D006304:Health Status; D006801:Humans; D008017:Life Expectancy; D008136:Longevity; D017059:Models, Econometric; D019057:Quality-Adjusted Life Years