Health Economics

HEALTH ECONOMICS
Health Econ. 24: 1289–1301 (2015)

Published online 28 July 2014 in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/hec.3085
THE WILLINGNESS TO PAY FOR A QUALITY ADJUSTED LIFE YEAR:

A REVIEW OF THE EMPIRICAL LITERATURE
LINDA RYENa,* and MIKAEL SVENSSONa,b

a
Department of Economics, Karlstad University, Karlstad, Sweden
b
Department of Economics, Örebro University, Örebro, Sweden
ABSTRACT
There has been a rapid increase in the use of cost-effectiveness analysis, with quality adjusted life years (QALYs) as an
outcome measure, in evaluating both medical technologies and public health interventions. Alongside, there is a growing
literature on the monetary value of a QALY based on estimates of the willingness to pay (WTP). This paper conducts a
review of the literature on the WTP for a QALY. In total, 24 studies containing 383 unique estimates of the WTP for a
QALY are identified. Trimmed mean and median estimates amount to 74,159 and 24,226 Euros (2010 price level), respec-
tively. In regression analyses, the results indicate that the WTP for a QALY is significantly higher if the QALY gain comes
from life extension rather than quality of life improvements. The results also show that the WTP for a QALY is dependent
on the size of the QALY gain valued. Copyright © 2014 John Wiley & Sons, Ltd.
Received 7 October 2013; Revised 5 May 2014; Accepted 20 June 2014
JEL Classification: D61, I18, H51
KEY WORDS: QALY; willingness to pay; literature review
1. INTRODUCTION
When deciding what new medical technologies and public health interventions to implement, reimburse, or
recommend, public policy-makers are increasingly looking to economic evaluations to guide their decision-making.
In the field of health care and public health, economic evaluations are primarily conducted using cost-effectiveness
analysis (CEA) with quality adjusted life years (QALYs) as an outcome measure (also referred to as cost-utility
analysis). Government authorities in, for example, the UK, the Netherlands, Australia, and Sweden, place significant
importance on the incremental cost per gained QALY (the incremental cost-effectiveness ratio) when deciding on
reimbursement, subsidizing, or paying for new pharmaceuticals and drafting clinical guidelines (ISPOR, 2013).
Assuming perfect divisibility and constant returns to scale in all interventions, two decision rules have been
suggested when using CEA with QALYs as an outcome measure (Weinstein and Zeckhauser, 1973): (i) choose
interventions in ascending order of cost per QALY until the budget is exhausted and (ii) select interventions
with a cost per QALY less than or equal to a specified threshold value.
The first approach, sometimes referred to as the ‘league-table’ rule, is seldom an option because the decision
maker rarely (never?) has information on the cost per QALY for all potential interventions. In practical
applications, the relevant decision rule is therefore the ‘threshold approach’, where the cost per gained QALY
is compared with some specified threshold value or range of values. It thus becomes necessary to determine
what the threshold value should be, that is, what constitutes a maximum cost per QALY for an intervention
to be considered cost-effective. Threshold values often referred to in the literature and policy debates include
the US value of US$50,000 to US$100,000 (approximately €37,500 to €75,000), which dates back to 1982
*Correspondence to: Department of Economics, Karlstad University, Universitetsgatan 1, 651 88, Karlstad, Sweden. E-mail: linda.ryen@msb.se
Copyright © 2014 John Wiley & Sons, Ltd.

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1290 L. RYEN AND M. SVENSSON
(Kaplan and Bush, 1982), and a UK threshold value around £20,000 to £30,000 (approximately €24,000 to
€36,000) (NICE, 2004). In Sweden, relevant government authorities have suggested a threshold of 500,000
SEK (approximately €57,000) (Socialstyrelsen, 2007).1
These different threshold values are based on different theoretical or methodological perspectives, and it has
been argued that the threshold value can be based on (i) the opportunity cost approach and/or (ii) the
willingness to pay (WTP) approach, also referred to as the (i) supply-sided and (ii) demand-sided approach
(Baker et al., 2011). The opportunity cost/supply-sided approach is based on an assumption of a fixed health
care budget where each new technology, if not cost saving, will necessarily displace some existing services.
The cost per QALY for the new intervention should then be lower, compared with services being displaced
in order to be considered cost-effective. This implies that the threshold value should represent the cost per
QALY of displaced services and thus represent the shadow price of the budget constraint.2
The second approach, the WTP or demand-sided approach, may be traced back to attempts to link CEA with
cost-benefit/welfare economics. If QALYs satisfy certain conditions such that it represents utility, and there is
(one) societal WTP for a QALY (henceforth referred to as WTP-Q), comparing the cost per QALY of an
intervention with a WTP-based threshold value may directly tell us something about the welfare effects of
the intervention (Phelps and Mushlin, 1991). Critics have argued, especially in the UK context, that the
WTP-Q is not a meaningful information source for allocating resources in a setting with fixed health care
resources. However, policies evaluated on the basis of their cost per QALY are becoming increasingly common
in a wider set of sectors where it is not evident that paying for the new policy will displace existing health care
services. It could rather be paid for by raising new tax revenue or by decreasing allocation to other government
sectors. In such cases, it becomes relevant to assess the utility loss of foregone private consumption that is
equivalent to the utility gain because of an increase of one additional QALY, that is, the WTP-Q. We also
expand on this in the discussion section.
In the WTP/demand-sided perspective, there have been two empirical approaches to estimate the WTP-Q. A
first and direct approach is to ask respondents about their WTP for small health increases/QALYs using stated
preference (SP) techniques such as discrete choice experiments or contingent valuation. The WTP estimates
can subsequently be used to estimate the WTP for a gain in a full QALY. A second approach is to use the
monetary value of preventing fatalities (the value of a statistical life), on which there is a substantial empirical
literature, in order to implicitly derive the WTP-Q assuming a certain life expectancy (LE) and discount rate for
the sample on which the value of life is derived. Mason et al. (2008) reviewed the early empirical literature on
WTP-Q including 13 studies, and they reported one mean estimate from each study.3 One of the main
conclusions was that the elicited values varied substantially across methods and that the type of QALY seemed
to influence the WTP-Q, albeit they did not conduct any formal meta-analyses.
The aim in this paper is to conduct an updated review of the empirical literature on WTP-Q. Our contribu-
tions include an updated list of reviewed studies, a more detailed description of WTP-Q estimates, and formal
analyses of how methodological differences in different studies affect WTP-Q estimates. We conduct the
review by means of database searches of the published literature (English language) identifying empirical pa-
pers where the aim is to estimate the WTP-Q and where original estimates are used. In total, we have identified
24 papers with 383 WTP-Q estimates. The overall mean and median WTP-Q estimates are €118,839 and
€24,226, respectively (2010 Euros). The interval of estimates ranges from less than €1000 to €4,800,000.
However, 80% of all estimates are below €75,000. Estimates based on the direct SP approach are generally
1
Currency conversions based on exchange rates in September 2013.
2
The threshold value as suggested in the UK is based on the opportunity cost approach, and recent work to determine such a threshold value
has been conducted by means of econometrically estimating the (average) cost per QALY of interventions being displaced across the Na-
tional Health Service. Results indicate a ‘best estimate’ threshold value of £12,936 per QALY (Claxton et al., 2013).
3
Mason et al. (2008) classified the methodological approaches to estimate WTP-Q in three categories: (i) conversions from VSL studies; (ii)
direct WTP studies among the general population; and (iii) direct WTP studies among a specific patient population. In this paper, we com-
bine the latter two into one category.
Copyright © 2014 John Wiley & Sons, Ltd. Health Econ. 24: 1289–1301 (2015)
DOI: 10.1002/hec
THE WILLINGNESS TO PAY FOR A QALY 1291
lower compared with estimates from value of statistical life (VSL)-conversion studies. Regression analysis also
indicates that WTP-Q tends to be higher if a risk of premature death is included in the valuation scenario than if
pure quality of life (QoL) changes are being valued.
The rest of this paper is structured as follows. In Section 2, we describe the method for our systematic
literature searches for papers containing WTP-Q estimates. Summaries of the included studies are presented in
Section 3. Section 4 shows the findings, including 383 estimates of the WTP-Q based on findings from 24 papers.
The paper is concluded with a discussion in Section 5.
2. METHOD OF REVIEW
The aim was to conduct a review of the English-language literature estimating the WTP-Q. The search strategy was
based on the premise that we were only interested in papers containing original explicit estimates of WTP-Q, that
is, any papers referring to an estimate published earlier were therefore excluded. Further, this implies that we did
not perform any calculations of our own from papers that potentially had data allowing us to do so ex-post.
We started the review by conducting a search in the electronic bibliographic databases Pubmed, Econlit, and
Google Scholar. The following search terms/keywords were used: ‘willingness to pay’, ‘WTP’, ‘value’, and
‘monetary value’, in all possible combinations together with ‘QALY’, ‘quality-adjusted life year’, and ‘life
year’. Inclusion criteria for initial selection were that a paper contained any of the possible combinations of
key terms and that the paper was published in a peer-reviewed journal. The first search was conducted in July
2010, with two later updates in early and late 2013, respectively. A first gross list of 1400 papers was identified,
of which 32 papers were included for full analysis based on the inclusion criteria that our key terms were
identified in the title and/or abstract. After retrieving these articles, their references were audited to identify
additional papers, which resulted in another 21 papers raising the total to 53 papers.
After retrieving these 53 papers, all were read in full detail of two researchers working independently of each
other, in order to determine whether the papers contained relevant estimates of WTP-Q. This narrowed the result
to 13 papers. The dominating reason for a paper being excluded was that WTP-Q estimates were not explicitly pre-
sented. The updated search in 2013 resulted in another 11 papers, reflecting a growing interest in the subject.
Hence, we reached a final amount of 24 published papers from which data were extracted and analyzed qual-
itatively and quantitatively. Table I provides basic details of the 24 papers from which data were extracted.4
3. DESCRIPTION OF STUDIES
We consider the main methodological difference to lie in whether estimates are based on studies of SPs or on
conversions from VSL studies. SP studies are most common with 21 out of 24 papers based on SP methods.
Most studies are European (14) or from the USA (5). One study is conducted in China, one in Thailand, one
in Japan, and one study estimates the WTP-Q in several countries (Australia, Japan, Republic of Korea,
Taiwan, UK, and USA). Additionally, one study that calculates the WTP-Q using the VSL approach is based
on more than 40 VSL studies where different countries are represented.
Estimates also differ in terms of whether the QALYs are based on changes in QoL (either avoiding a decline
or opting for an improvement) or on changes in length of life. By definition, VSL conversions value changes in
the length of life, but there is also a difference in SP studies based on whether QoL changes are being valued
solely, or if length of life is also part of the valuation exercise. The following subsections contain a description
of the main methodological differences.
4
In the context of this literature, the Eurovaq project deserves mentioning (Donaldson et al., 2010). It was a large pan-European project with
the aim of developing robust methods to estimate WTP-Q in 10 European countries. Some of the papers listed in Table 1 are a result of the
Eurovaq-project (Pennington et al., 2013; Robinson et al., 2013). The full report, not included here because it does not constitute a journal
publication, can be downloaded at:http://research.ncl.ac.uk/eurovaq/EuroVaQ_Final_Publishable_Report_and_Appendices.pdf.
DOI: 10.1002/hec
Table I. List of included studies

Author(s) and year of publication Country Total sample size
Blumenschein and Johannesson (1998) USA 69
Johannesson and Meltzer (1998) SWE —
Zethraeus (1998) SWE 104
Cunningham and Hunt (2000) UK 40
Hirth et al. (2000) Several —
Gyrd-Hansen (2003) DEN 3201
Byrne et al. (2005) USA 193
King et al. (2005) USA 391
Mason et al. (2009) UK —
Lieu et al. (2009) USA 478
Pinto-Prades et al. (2009) ESP 892
Bobinac et al. (2010) NED 1091
Shiroiwa et al. (2010) AUS, JPN, KOR, TWN, UK, USA 5500
Baker et al. (2010) UK 409
Haninger and Hammitt (2011) USA 2858
Zhao et al. (2011) CHN 632
Gyrd-Hansen and Kjær (2012) DEN 1724
Thavorncharoensap et al. (2013) THA 1191
Pennington et al. (2013) NED, UK, FRA, ESP, SWE, NOR, DEN, POL, HUN 17,657
Robinson et al. (2013) NED, UK, FRA, ESP, SWE, NOR, DEN, POL, HUN 21,896
Shiroiwa et al. (2013) JPN 2283
3.1. Direct stated preference studies

Stated preference techniques rely on asking hypothetical questions where respondents are asked to state
their WTP (or in a binary/dichotomous setup whether their WTP is higher than a specified amount) for
a given health improvement (contingent valuation [CV]) or to choose between alternatives that differ with
respect to price/cost and level of health improvement along with a number of other potential attributes
(choice experiments). All the papers included in this review use the CV approach. To exemplify, Bobinac
et al. (2010) perform a CV study where respondents are shown two different health state descriptions
(based on EQ-5D) and are asked to value those on a visual analog scale. Respondents are then asked
about their WTP for avoiding a decline in health from the better state to the worse during a year, from
which the WTP for a ‘full’ QALY can be estimated. Another example is a CV study by Gyrd-Hansen
(2003) where 42 health descriptions are paired into 23 choice scenarios. Each respondent is presented
with one choice scenario and asked to indicate which state is worse. Following this, respondents are
asked to imagine themselves in the worse of the two health states and about their WTP to move to
the preferred health state.
Although all of the SP studies use the CV approach, they differ substantially in many other methodological
aspects. In Table II, we categorize the papers according to whether or not the respondent is asked to consider an
individual or societal perspective, if the sample is a patient-specific or a general population sample, whether the
QALY change was based on a QoL improvement or LE improvement, as well as a brief description of the
health context, for example, if the QALY was based on a general health improvement or targeted a specific
disease condition.
The most common approach is to ask a sample of the general population about their WTP for a change in
general health and to use a QALY change due to a QoL improvement. Samples of specific populations, that
is, those already suffering from certain conditions, are mostly used when asking about the WTP for health changes
due to the disease in question. An individual perspective is the most common, and a societal perspective, where
potential altruistic WTP is included, is only used in two studies.
DOI: 10.1002/hec
Table II. Included stated preferences studies—overview of methodological differences

Individual or General or specific Good
Author(s) social perspective population (QoL or LE) Subject
Blumenschein and Individual Specific QoL Asthma cure
Johannesson (1998)
Zethraeus (1998) Individual Specific QoL Hormone replacement therapy
Cunningham and Hunt (2000) Individual Specific QoL Orthognathic treatment
Gyrd-Hansen (2003) Individual General QoL General health
Byrne et al. (2005) Individual General QoL Osteoarthritis scenarios and general health
King et al. (2005) Individual Specific QoL General health
Lieu et al. (2009) Individual Both QoL Shingles and post-herpetic neuralgia
Pinto-Prades et al. (2009) Individual General QoL General health
Bobinac et al. (2010) Individual General QoL General health
Shiroiwa et al. (2010) Both General LE General health
Baker et al. (2010) Individual General QoL Headache and stomach illness
Haninger and Hammitt (2011) Individual General QoL and LE Food-borne risk of illness and mortality
Zhao et al. (2011) Individual Both QoL Chronic prostatitis and general health
Bobinac et al. (2013) Societal General QoL General health
Gyrd-Hansen and Kjær (2012) Individual General QoL General health
Thavorncharoensap et al. (2013) Individual General QoL Blindness, paraplegia, and allergies
Pennington et al. (2013) Individual General QoL and LE General health
Robinson et al. (2013) Individual General QoL General health
Shiroiwa et al. (2013) Individual General QoL and LE General health
QoL, quality of life; LE, life expectancy.
3.2. Value of statistical life conversions

The VSL is a measure of the population mean marginal rate of substitution between wealth and mortality risks
(Jones-Lee, 1974; Viscusi, 1998). Empirical estimates of VSL are commonly used in economic evaluations of
‘life-saving’ policies in transport and environmental economics; see Lindhjelm et al. (2011) for a recent review
of empirical estimates. Generally, VSL can be estimated either by revealed preference or SP methods. Revealed
preference methods assume that individuals reveal their preferences by their market behavior. The information
is obtained by identifying situations in which individuals, either implicitly or explicitly, perform actual trade-
offs between wealth and mortality risks. One example is wage-risk studies, which estimate the wage premium
associated with greater risks of death on the job (Viscusi and Aldy, 2003). VSL estimated by SP methods relies
on the same approach as detailed in Section 3.1, in which a hypothetical market situation is presented to survey
respondents who are then asked about their WTP for a given change in the level of mortality risk.
In general, WTP-Q can be estimated from VSL studies by using a present-discounted-value formula. Hirth
et al. (2000) exemplify this by showing a case study where the average age of individuals is 38, which implies
an expected 40 remaining life years. Each future life year t has a quality-adjusted weight qt, and VSL in the
population is estimated to be $3,000,000. Based on a discount rate of 3% (NICE, 2004), the implied WTP-Q
qt þ38 χ
is given by solving for χ in 3; 000; 000 ¼ ∑t¼39 . This general approach, or slight modifications
t¼0
ð1 þ 0:03Þt
of it, is used in three studies included in this review summarized in Table III.
4. FINDINGS
4.1. Mean and median estimates of willingness to pay for a quality adjusted life year
Most of the papers listed in Tables I–III provide not just one but several WTP-Q estimates. These are sub-
sample estimations reflecting differences in estimation procedures and/or preference elicitation methods. The
24 papers identified, as outlined in the previous section, contain a total of 383 estimates.
DOI: 10.1002/hec
Table III. Included value of statistical life conversion studies—overview of methodological differences
Author QALY weights VSL used
Johannesson and QALY weights from the Swedish population (EuroQol) VSL of the Swedish Road Administration and
Meltzer (1998) VSL of wage-risk studies.
Hirth et al. (2000) Age-specific QoL-weights from the Beaver Dam Health Review of 42 VSL studies
Outcomes Study
Mason et al. (2009) QALY weights from the UK population norms for EQ-5D VSL used in UK public decision-making
VSL, value of statistical life; QALY, quality adjusted life year.
Table IV. Included studies—estimates of willingness to pay for a quality adjusted life year in 2010 Euros
Range of estimates
No. of estimates
Author(s) in paper Lowest estimate Highest estimate Mean estimate
Blumenschein and Johannesson (1998) 2 7339 48,228 27,783
Johannesson and Meltzer (1998) 3 79,790 453,969 241,812
Zethraeus (1998) 2 14,632 19,291 16,961
Cunningham and Hunt (2000) 1 741 741 741
Hirth et al. (2000) 41 21,815 1,204,963 294,017
Gyrd-Hansen (2003) 2 11,892 14,121 13,007
Byrne et al. (2005) 9 1134 5284 3163
King et al. (2005) 12 11,174 28,785 20,799
Mason et al. (2009) 12 32,319 94,606 66,056
Lieu et al. (2009) 9 22,448 38,852 32,041
Pinto-Prades et al. (2009) 37 4654 125,588 30,843
Bobinac et al. (2010) 4 9838 25,108 16,627
Baker et al. (2010) 2 20,958 26,518 23,738
Shiroiwa et al. (2010) 24 20,682 75,813 45,376
Bobinac et al. (2010) 29 1231 21,959 9389
Haninger and Hammitt (2011) 27 132,335 4,864,167 892,065
Zhao et al. (2011) 4 3671 5693 4760
Bobinac et al. (2013) 6 51,006 184,578 92,533
Gyrd-Hansen and Kjær (2012) 14 3040 107,688 38,844
Thavorncharoensap et al. (2013) 24 633 6934 1922
Pennington et al. (2013) 15 6266 23,049 12,210
Robinson et al. (2013) 80 7841 43,279 20,161
Shiroiwa et al. (2013) 16 15,597 77,986 42,499
Bobinac et al. (2014) 8 54,132 244,768 114,665
In order to render values comparable across locations and time, estimates are expressed in 2010 Euros. In a
first step, using Organisation for Economic Co-operation and Development (OECD) data on CPI,5 all estimates
are converted to the 2010 price level and in a second step to Euros using OECD average exchange rates for
2010. The number of estimates, mean, minimum, and maximum estimates from each of the papers is summa-
rized in Table IV. As seen in Table IV, the interval is broad, including estimates of WTP-Q from €632 to
€4,864,167.
Moving on to Table V, we show summary statistics of the included WTP-Q estimates in the form of mean,
median, and trimmed mean values (by excluding the 2.5% lowest and highest estimates). Estimates are calcu-
lated including all specific WTP-Q estimates and grouping them depending on whether they are based on the
SP or VSL-conversion method. Further, the SP estimates are also shown excluding estimates from the study by
Haninger and Hammitt (2011). The reason for this is that this paper is methodologically rather different because
of the use of very small (foodborne) risks, and accordingly, one of their findings is that WTP is not proportional
to the change in QALYs. Further, all estimates from the study are higher compared with all but one of the other
5
Except for the paper by Thavorncharoensap et al. (2013) where corresponding data from Bank of Thailand is used for conversion.
DOI: 10.1002/hec
Table V. Mean (standard errors) and median estimates of willingness to pay for a quality adjusted life year in 2010 Euros
SP estimates excluding
All estimates SP estimates Haninger and Hammitt VSL estimates
Mean 118,839 (19,120) 97,683 (21,339) 26,189 (1,636) 242,371 (35,786)
Median 24,226 20,622 19,196 109,858
Trimmed mean 74,159 49,778 23.721 228,630
SP, stated preference; VSL, value of statistical life.
SP estimates included, and considering that the study includes many separate WTP-Q estimates, the influence
on the mean is substantial.
We see that the overall mean and median WTP-Q estimates are €118,839 and €24,226, respectively.
Estimates based on the direct SP approach are lower compared with estimates from VSL-conversion studies
(statistically significant p < 0.05). Disregarding the WTP-Q estimates from Haninger and Hammitt (2011),
this difference is even more pronounced, with the mean WTP-Q estimate based on SP studies lowered
from €97,683 to €26,189. The median estimate decreases from €20,622 to €19,196. Estimates based
on VSL-conversion studies have a mean of €242,371 and a median of €109,858.
In the left figure below (Figure 1), the range of estimates is shown in a histogram combined with a Kernel
density plot. For the sake of clarity of the general pattern, WTP-Q estimates higher than €500,000 are excluded
(23 estimates from two papers out of the total 383 estimates from 24 papers). The figure shows a long right tail
of estimates, and 80% of estimates are in the range below €75,000. The figure to the right below shows the
distribution of estimates after logarithmic transformation (all estimates included). The reason for this transfor-
mation is to pull outlying data from a positively skewed distribution closer to the bulk of data in a quest to have
the dependent variable normally distributed; this will also be used for later analyses.
4.2. The impact of methodological differences

Several factors have been associated with differences in WTP-Q estimates. The most obvious one from a
methodological point of view is whether estimates are based on SP studies or VSL conversions. When it comes
150
40
30
100
Frequency
Frequency
20
50
10
0
0 100000 200000 300000 400000 500000 6 8 10 12 14 16

WTP−Q Ln(WTP−Q)
Figure 1. Histogram of willingness to pay for a quality adjusted life year (WTP-Q) and Ln(WTP-Q) estimates
DOI: 10.1002/hec
Table VI. Comparing willingness to pay for a quality adjusted life year (QALY) in direct stated preferences studies versus
value of statistical life conversion studies, length of life versus quality of life, different magnitudes ΔQALY
Model A Model B Model C Model D Model E
All excluding Haninger All SP studies All SP excluding All studies (9) that
All studies and Hammitt (21 studies) Haninger and Hammitt report ΔQALY
Dependent variable: Coefficient Coefficient Coefficient Coefficient Coefficient

Ln(WTP-Q) (standard error) (standard error) (standard error) (standard error) (standard error)
*** ***
VSL conversion 1.857 2.143 — — —
(compared with SP) (0.206) (0.163) () () ()
*** ***
Length of life — — 1.493 0.873 —
(compared with QoL) () () (0.206) (0.197) ()
***
ΔQALY — — — — 1.028
() () () () (0.071)
*** *** *** *** ***
Intercept 9.964 9.677 9.726 9.578 10.008
(0.079) (0.064) (0.082) (0.066) (0.067)
N 383 356 327 300 161
2
R 0.176 0.329 0.139 0.062 0.572
Models A/B and C/D cannot be run in the same regression because it excludes all variation on VSL conversion. Running models D and E in
the same regression, rather than in two single regressions, give identical results to those reported here.
VSL, value of statistical life; SP, stated preference; QALY, quality adjusted life year.
Note: ***denote statistical significance at 1%.
to VSL conversions, what is valued is by definition length of life, but in the case of SP studies, what respon-
dents are asked to pay for could be pure QoL, pure length of life, or a mixture of both. Gyrd-Hansen (2003)
discusses the possible influence on WTP-Q estimates caused by respondents valuing small changes in QoL
or extensions of life. Out of 21 SP studies supplying estimates of the WTP-Q, 17 are based on pure QoL
changes, while the others introduce life-extending treatments or combine the two aspects by introducing a
conditional risk of death into some of the possible health states.6 Additionally, one of the main concerns with
using SP data is the issue of scale bias, which has been much discussed in the VSL literature (Hammitt and
Graham, 1999; Lindhjelm et al., 2011). In the context of WTP-Q, the WTP needs to be proportional to the
QALY change in order to have a constant WTP-Q. As an example, if WTP is €100 for ΔQALY = 0.01, it is
required that WTP is €200 for ΔQALY = 0.02, for WTP-Q to be constant.
In the following, we use (ordinary least squares) regression analysis to analyze the impact of methodological
differences on WTP-Q estimates. Firstly, VSL conversions are compared with SP studies, then estimates based
on QoL changes are compared with estimates based on LE changes. Thirdly, the impact of the magnitude of the
QALY gain/loss is analyzed. All regression results are shown in Table VI. 7
4.2.1. Value of statistical life conversions compared with stated preference studies. In the first regression, (the
logarithms of) WTP-Q estimates based on VSL conversions are compared with (logarithms of) estimates
obtained by SP studies, using a dummy variable representing type of study. Based on this regression, we con-
firm the descriptive results from Table V that WTP-Q estimates from VSL studies are significantly higher than
those obtained from SP studies. Excluding the estimates from Haninger and Hammitt (2011) strengthens this
6
See Section 3, description of studies, for further details.
7
In Table II, we also listed the sample population (general public or patient population) to be an important methodological difference across
studies. We do not formally test for this in the paper because it is very highly correlated with whether or not the good respondents are asked
to value is a general health improvement or a disease specific health improvement. Hence, there is no clean identification for this, and a
potential difference in WTP-Q could be due to either of these two phenomena. However, it should be mentioned that we have conducted
these regression analyses without finding any statistically significant results (which are available upon request from the authors). More-
over, we highlighted the fact that a study could take an individual or societal perspective in the WTP question. We do not formally test
for this either, because the societal perspective is primarily only used in one single study, also making the identification of the effect noisy.
DOI: 10.1002/hec
result further. According to these regressions, if the WTP-Q is based on a VSL conversion, it will on average be
between 5.4 times (based on all studies) and 7.5 times (excluding Haninger and Hammitt (2011)) higher than if
based on a SP study.
4.2.2. Length of life changes compared to quality of life changes. In models C and D, only using SP studies, a
dummy variable represents whether WTP-Q estimates are based on changes in length of life or on changes in
QoL. There are four papers taking length of life into account (Table II). Length of life is incorporated in differ-
ent ways. For example, in the paper by Shiroiwa et al. (2010), length of life is the only dimension changing,
whereas Haninger and Hammitt (2011) incorporate changes in both dimensions (QoL and length of life).8
Regression results imply that WTP-Q estimates are 3.5 times higher (based on all SP studies) and 1.4 times
higher (excluding Haninger and Hammitt) if partly/purely based on changes in length of life than on QoL
changes alone.
4.2.3. The impact of the quality adjusted life year change magnitude. A regression analysis is made for those
estimates where the size of the QALY gain is explicitly stated in the article and based on pure QoL changes.
This reduces the sample to 161 estimates from nine papers.9 Only QALY gains that were readily available were
used, that is, we did not perform any calculations of our own where data potentially would have allowed us to
do so ex-post. If the WTP is proportional to the QALY change, which is required for a constant WTP-Q, the
coefficient of ΔQALY should be equal to zero. Based on the results, we reject the null hypothesis that the
WTP-Q is constant across different QALY changes. The negative and statistically significant coefficient
estimate implies that larger QALY changes give lower WTP-Q estimates. For each unit larger QALY change,
the WTP-Q is 64% smaller, that is, a substantial economic effect.
5. DISCUSSION
The wide spread of WTP-Q estimates in the 24 articles, ranging from less than €1000 to €4,800,000, may be
explained by several factors: they differ in methodology, preference elicitation methods, study countries,
perspective (social/individual) taken, and sample population (general population or specific patient groups).
While some studies aim at finding a WTP-Q estimate valid for a given patient group or similar (Byrne et al.,
2005; King et al., 2005), others explicitly aim at testing the WTP-Q and the presence of biases in obtaining
it (Pinto-Prades et al., 2009; Bobinac et al., 2012). As in a previous review of the first studies on WTP-Q
(Mason et al., 2008), we find several violations against the view that ‘a QALY is a QALY is a QALY’, that
is, the WTP-Q seems to be related to several different contextual factors.
The results from the regression analyses indicate that WTP-Q is higher if based on VSL conversions, and
further, when based on SP studies, WTP-Q tends to be higher if the QALY change comes from LE changes
compared with only QoL changes. This supports the reasoning by Gyrd-Hansen (2003) p. 1057:
Our results imply that the value of a QALY derived through contingent valuation or revealed preference
studies, based on preferences for reducing risk of death, may overestimate the monetary value of obtaining
smaller quality of life improvements with certainty.
The implication in this case is that WTP-Q estimates obtained from QoL improvements might not be appropri-
ate when evaluating policies affecting length of life and vice versa. Still, there is a lack of studies combining
QoL and length of life changes, which in practice might be the relevant case for a large number of policies
or health technologies that are evaluated.
8
Some of the Haninger and Hammitt (2011) estimates only encompass pure quality of life changes.
9
The nine papers are the following: Gyrd-Hansen (2003), Zethraeus, Baker, Bobinac et al. (2011), Thavorncharonensap, Robinson et al.,
Pennington et al., Shiroiwa (2013), and Bobinac(2014). For some papers, QALY changes for all estimates are not available.
DOI: 10.1002/hec
Further, in line with some previous results from single studies, we find that the WTP is not proportional to
the change in QALYs (Pinto-Prades et al., 2009; Bobinac et al., 2010; Pennington et al., 2013). More specifically,
we find scale bias such that WTP is less than proportional to the change in QALYs, implying that WTP-Q is higher
in studies where respondents are asked to value a relatively small QALY change. This is possibly also part of the
explanation for the higher estimates resulting from VSL-conversion studies, because VSL estimates are generated
from small changes in risk of death. It may also partly explain the high WTP-Q estimates in Haninger and Hammitt
(2011), because this study used the smallest QALY changes by far in its valuation exercise. Common arguments
for the presence of scale (and scope) bias are that respondents give attitudinal expressions rather than state their
WTP, the presence of anomalies in decision-making for this type of goods, and cognitive constraints among
respondents, resulting in reference-dependent and nonstable preferences (Kahneman and Knetsch, 1992;
Hausman, 2012). Another potential reason for the scale bias finding that has been discussed in the literature is that
individuals may not be ready to trade length of life for QoL in time trade off (TTO) exercises, while still being will-
ing to pay for the QoL improvement (positive WTP) (Robinson et al., 2013). If this is the case, the QoL difference
between two health states may be zero, while respondents still have a positive WTP for the difference between the
two health states, implying an infinitely high WTP-Q at the individual level, and a statistically significant positive
WTP-Q for a zero QALY gains at the aggregate level. This may become a problem in studies where respondents
are asked both to value utility/QoL differences between health states and are asked for their WTP for moving be-
tween these two health states.
This also relates to the theoretical discussion of whether it is possible to use WTP-based values for a QALY
in order to create a link to welfare economics. Critics of this approach have argued that QALYs are not a valid
measure of utility in accordance with welfare theory, and one constant WTP-Q does not exist,10 which would
make it theoretically invalid to estimate the monetary gain of a health improvement by multiplying the gain in
QALYs with a WTP-based value of a QALY (Pliskin et al., 1980; Bleichrodt et al., 1997; Hammitt, 2006).11
On the other hand, it has been argued that deviations from the necessary conditions for having one unique
WTP-Q are often small, and most health interventions evaluated often imply only very small (expected
average) changes in QALYs (Hammitt, 2006), which would be a more practically oriented counterargument
to this criticism. But irrespective of this theoretical discussion, we find that the empirical deviation from a
constant WTP-Q is far from small.
Other potential reasons for differences in WTP-Q estimates that we have not formally analyzed in this
review includes whether or not the study was based on an individual or societal perspective (because there is
too little variation in our included studies to permit these analyses). Using a societal perspective where the
respondent is asked to consider a health improvement capturing the population at large implies that respon-
dents’ potential altruistic WTP will be included, which could imply higher WTP-Q. On the other hand, from
the VSL literature, we know that many studies report the opposite that WTP for mortality risk reductions is
higher when using an individual (private) perspective (Lindhjelm et al., 2011).
As also discussed in the introduction, there is general criticism regarding the relevance of a WTP-based
value of a QALY. For example, it has been stated that It is not NICE’s constitutional role to determine the value
of an additional QALY since the setting of the NHS budget is properly a matter for parliament (Culyer et al.,
2007). Apart from the fact that this critique may be relevant for all applied welfare economic evaluations, there
are more specific counterarguments to this view. Firstly, the general view (as we interpret it) is that economic
evaluations are an input to decision-making, not a substitute, that is, the final say of politicians, parliament
(or similar) in actually allocating public resources is not removed. Secondly, it is relevant for policy-makers
and decision-makers to have an understanding of the preferences of the population regarding resource
10
It may also be the case that a constant WTP-Q does not exist if individuals also have positive WTP for other characteristics apart from
pure health outcomes, for example, process utility, regret utility, and information utility (Mooney, 1998).
11
For QALYs to represent utility demand conditions, such as mutual utility independence, constant proportional trade-off of longevity for
health, risk neutrality over life span, and additive independence across periods. Empirical evidence is generally not in accordance with the
assumptions, and QALY is henceforth not a valid measure of utility. Even further, in order to have a constant WTP-Q, it is necessary for
the WTP per QALY to be unrelated to wealth and to total QALYs.
DOI: 10.1002/hec
allocation, which is exactly the information provided in a WTP-based threshold value. For example, if the
current fixed health budget implies that decision-makers cannot fund interventions with a cost per QALY
of €40,000, and we have estimates that population WTP-Q is €50,000, we are being told something about
allocative efficiency issues of public resources. Thirdly, and as highlighted in the introduction, more and
more CEAs with QALY as outcome measure are being used in a wider context than medical technologies
and health care, for example, in evaluations of public health, social care, interventions, and environmental
regulations that affect health. This implies that it is not evident that paying for such interventions will
necessarily imply that any health will be displaced. Instead, it may very well be that paying for new health
improving interventions will come from new tax revenue (i.e., replacing private consumption) or from other
governmental sectors in the economy. In this case, it becomes relevant to base the ‘threshold value’ on the
WTP for a QALY, which is the utility loss of foregone private consumption that is equivalent to the utility
gain due to an increase of one additional QALY.
In summary, we see it as a reasonable perspective that, based on the context, type of interventions, and
policy objectives, a WTP-based approach to determining the threshold value may be appropriate and/or provide
other valuable information to policy-makers regarding the population’s preferences. However, empirical
difficulties in pin-pointing a smaller band of WTP-Q are substantial; a dilemma shared with nonmarket valua-
tion research in, for example, transport and environmental economics. And even if it is not likely that empirical
estimates of WTP-Q will converge into a small interval giving us a unique WTP-Q (compare with the VSL
literature, which still after 30–40 years of empirical research produces a wide interval of estimates), it is an
important area for future research to try to better understand some of the reasons/mechanisms driving the large
variations in WTP-Q. As a final note, it can also be highlighted that the empirical literature on WTP-Q reviewed
in this paper consists of SP or hypothetical studies, indicating that well-conducted revealed preference studies
of individuals’ behavior would constitute a relevant addition to this research field.
6. CONCLUSIONS
We have reviewed the English-language published literature on the WTP for a QALY and identified 24 studies con-
taining 383 unique estimates. The mean estimate amounts to €118,839 and the median estimate to €24,226.
Disregarding the 2.5% highest and lowest estimates, respectively, the resulting trimmed mean amounts to
€74,159. About 80% of all estimates are below €75,000. We also conclude that the evidence is not in favor of
the assumption that ‘a QALY is a QALY is a QALY’. Rather, we find that individuals have a higher WTP if the
QALY is based on length of life improvements compared with QoL improvements. Further, the evidence indicates
that there is a problem with scale bias, that is, WTP is not linearly proportional to the QALY change respondents are
asked to value, which implies that WTP-Q is lower if respondents are asked to value higher changes in QALY.
CONFLICT OF INTEREST
The authors have no conflict of interest.
ACKNOWLEDGEMENTS
We want to thank Lars Hultkrantz, Björn Sund, Henrik Jaldell, Niklas Jakobsson, and seminar participants at
the workshop for the Swedish Graduate Program in Economics. We also thank two anonymous reviewers
for their comments and suggestions that led to substantial improvements.
Financial support from the Swedish Civil Contingencies Agency (MSB) and Swedish Research Council for
Health, Working Life and Welfare (Forte) is gratefully acknowledged.
DOI: 10.1002/hec
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Health Econ. 24: 1289–1301 (2015)

THE WILLINGNESS TO PAY FOR A QUALITY ADJUSTED LIFE YEAR:

LINDA RYENa,* and MIKAEL SVENSSONa,b

Received 7 October 2013; Revised 5 May 2014; Accepted 20 June 2014

JEL Classiﬁcation: D61, I18, H51

KEY WORDS: QALY; willingness to pay; literature review

Copyright © 2014 John Wiley & Sons, Ltd.

Table I. List of included studies

3.1. Direct stated preference studies

Table II. Included stated preferences studies—overview of methodological differences

3.2. Value of statistical life conversions

SP, stated preference; VSL, value of statistical life.

4.2. The impact of methodological differences

0 100000 200000 300000 400000 500000 6 8 10 12 14 16

Dependent variable: Coefficient Coefficient Coefficient Coefficient Coefficient

The authors have no conﬂict of interest.

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