Your Money or Your Life: A Prescriptive Model for Health, Safety, and Consumption Decisions

  title={Your Money or Your Life: A Prescriptive Model for Health, Safety, and Consumption Decisions},
  author={James E. Smith and Ralph L. Keeney},
  journal={Manag. Sci.},
In this paper we develop a conceptual framework and model for valuing risks to an individual's health and life and to support decision making about investments in health, quality of life, and safety. Our treatment of health risks in the model builds on the popular quality-adjusted-life-year (QALY) framework that balances health quality and length of life issues. We extend this framework to consider financial concerns as well as health quality and length of life. Our model considers uncertainty… 

Effects of Health and Longevity on Financial Risk Tolerance

We investigate the effects of health and life expectancy on tolerance of financial risk. Using a standard life-cycle model, we find that the effects of health and life expectancy on preferences over

Years of good life based on income and health: Re-engineering cost-benefit analysis to examine policy impacts on wellbeing and distributive justice

In this paper, we propose a practical measure of individual wellbeing to facilitate the economic evaluation of public policies. We propose to evaluate policies in terms of years of good life gained,

Quality adjusted life years based on health and consumption: A summary wellbeing measure for cross‐sectoral economic evaluation

A summary wellbeing measure for economic evaluation of cross‐sectoral public policies with impacts on health and living standards and facilitates distributional analysis in terms of how many good years different population subgroups can expect to live under different policy scenarios.

A Sensitivity Analysis for the Derived Micromort Value of Life and Death Decisions Using Two Methods for Constructing Utility Functions

  • Ahmed A. AlzankiA. Abbas
  • Economics
    2019 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM)
  • 2019
The results show that the Micromort value increases with the consumption level and decreases with age, and as the decision-maker increases the tradeoff between health and wealth, the Micronort value tends to increase.

Multiplicative Utilities for Health and Consumption

Two multiplicative utility forms from basic conditions are developed that can express risk aversion, decreasing absolute risk aversion and increasing relative risk aversion in life duration and the properties of this reduced form under correlation seekingness are examined and discussed.

A game-theoretic framework for estimating a health purchaser’s willingness-to-pay for health and for expansion

A game-theoretic framework for estimating a health purchaser’s willingness-to-pay for health in markets where the health purchaser offers a menu of medical interventions, and each individual in the population selects the intervention that maximizes her prospect is proposed.

Health condition and risk attitude in the Dutch population: an exploratory approach

Analysis of the relationship between health condition and behaviour under conditions of uncertainty and personal characteristics related to risk behaviour allows for understanding risk behaviour as the interaction between personal perception of risk attitude and the assessment of risk associated to a specific situation.

On the implementation of medical programs in health care systems: Game-theoretic frameworks

A game-theoretic framework for estimating a health purchaser’s willingness-to-pay (WTP) for health is developed, which is defined as the amount of money the health purchaser is willing to spend for an additional unit of health, and a principal-agent model is proposed to capture the interaction between the two parties.

Valuing mortality risk in the time of COVID-19

  • J. Hammitt
  • Economics
    Journal of risk and uncertainty
  • 2020
In evaluating the appropriate response to the COVID-19 pandemic, a key parameter is the rate of substitution between wealth and mortality risk, conventionally summarized as the value per statistical life (VSL), which is plausibly larger for risks that are dreaded, uncertain, catastrophic, and ambiguous.



QALYs versus WTP.

  • James K Hammit
  • Political Science, Medicine
    Risk analysis : an official publication of the Society for Risk Analysis
  • 2002
Quality adjusted life years (QALYs) and willingness to pay (WTP) are alternative measures of the value of reductions in health risk that are often used in evaluating environmental, health, and safety

Survival versus Consumption

We develop an indirect method to estimate utility and willingness to pay WTP for reductions in the risk of death at various ages. Using a life-cycle model of consumption, we assume that an individual

Cost-effectiveness in health and medicine

  • M. Gold
  • Medicine, Political Science
  • 1996
1. Cost-Effectiveness Analysis as a Guide to Resource Allocation in Health: Roles and Limitations 2. Theoretical Foundations of Cost-Effectiveness Analysis 3. Framing and Designing the

Multiattribute Structure for QALYs

This work examines multiattribute utility decompositions for the quality-adjusted life year (QALY) utility model commonly employed in medical decision and cost-effectiveness analyses and considers several independence conditions on preference, including the classical notions of preferential independence and utility independence, as well as new related notions of standard-gamble independence and time-tradeoff independence.

Evaluating Income Streams: a Decision Analysis Approach

Most important decision problems-virtually all capital investiments and planning situations-involve risky cash flows with uncertainties that are resolved over time. In most of these problems, the

Application of Multi-Attribute Utility Theory to Measure Social Preferences for Health States

A four-attribute health state classification system designed to uniquely categorize the health status of all individuals two years of age and over is presented and the modified method is found to be applicable to the task--no insurmountable difficulties are encountered.

On Making Life and Death Decisions

Recent research has provided us with methods by which an individual can make decisions that involve risk to his life in a way that is consistent with his total preferences and with his current risk

The Health Utilities Index (HUI®) system for assessing health-related quality of life in clinical studies

HUI has been shown to be a reliable, responsive and valid measure in a wide variety of clinical studies and is a useful tool for assessing health status and HRQoL in clinical studies.