Erik Nord: Cost-value analysis in health care. Making sense out of QALYs. Cambridge University Press 1999. 145 pages. Available at

The book is hopefully of interest to researchers, health administrators and health professionals. It may also be suitable as a student text book in health economics, political science and medical ethics. Please find below: Summary, specific messages, table of contents.

Summary: A number of empirical studies show strong concerns for fairness and equity in health care in most countries. Current economic evaluation models like the conventional QALY-model (cost-utility analysis) fail to capture these concerns. Ways to incorporate these concerns are outlined. The relevance of formal models for decision making is discussed.

Among the strengths of the book are its excellent exposition and its success in raising insightful and crucially important issues, making a major contribution to ongoing debates.’ - Amartya Sen

Specific messages:

- Cost-utility analysis places too much weight on the probability of treatment success.

- Cost-utility analysis places too much weight on the number of years that patients get to enjoy health improvements.

- Quality of life data obtained from patients should replace hypothetical valuations of health states.

- Standard gamble does not capture all aversion to risk.

- Life years gained in disabled people should be valued as much as life years gained in health people.

- Formal economic evaluation should be restricted to budget decisions (as opposed to clinical decisions).

- Cost-per-QALY league tables falsely assume that ’winners should take all’.


Table of contents

Chapter 1: Maximising value in health care.

1.1 Introduction.

1.2 The rationale for numerical measures of value.

1.3 Available numerical measures of value (explanation of CBA, CEA, CUA and DALYs).

Chapter 2: Three basic issues in economic evaluation

2.1 At which decision levels may economic models be helpful?

2.2 Values when caring for others versus values when thinking about self interest.

2.3 Resource allocation across programs and are essentially about trading off persons.

Appendix: Welfare economics and person trade-offs.

Chapter 3: The QALY approach.

3.1 What are QALYs?

3.2 Two major problems with QALYs.

 Chapter 4: Concerns for fairness.

4.1 What is fairness?

4.2 QALYs and fairness.

4.3 Fairness and gains in utility.

4.4 Ways of measuring concerns for fairness.

4.5 Societal concerns for severity.

4.6 Rules of thumb concerning severity.

4.7 Societal concerns for realising potentials for health.

4.8 Rules of thumb concerning severity and potentials for health.

4.9 The self-interest perspective behind a veil of ignorance.

4.10 The degree of error in utility based predictions of societal preferences.

4.11 The importance of the duration of a treatment effect.

4.12 Does discounting for time preference solve the duration problem?

4.13 The importance of age.

4.14 The importance of cost/the number of people helped.

4.15 The importance of the chance of successful treatment.

4.16 Summary.

4.17 Are better utilities or additional equity weights a solution?

Appendix: Severity weights and potential weights derived by means of the person trade-off technique.

Chapter 5: The limitations of utility measurement.

5.1 Ex ante or ex post utilities?

5.2 Whom to ask.

5.2.1 The prima facie case for asking patients.

5.2.2 Data on patients' quality of life.

5.2.3 Hypothetical valuations: Arguments and counter arguments.

5.2.4 The conventional use of hypothetical valuations may be due to a conflation of issues.

5.3 How to ask.

5.3.1 The level of measurement.

5.3.2 Understandability and verifiability.

5.3.3 The quantity-of-wellness interpretation of utility.

5.3.4 The value interpretation of utility.

5.3.5 Does the standard gamble capture all aversion to risk?

5.3.6 Evidence based, understandable and verifiable utilities.

5.3.7 The utility of small and moderate improvements.

5.3.8 The ex ante value of life saving procedures.

5.3.9 Summary and conclusion.

Chapter 6: Ways to go.

6.1 The problems.

6.2 The person trade-off issue revisited.

6.3 Acknowledging the value of life in disabled people.

6.4 Disability Adjusted Life Years (DALYs).

6.5 Towards Cost-Value Analysis.

6.6 Constructing a comprehensive value table.

6.7 Measurement problems.

6.8 The relevance of cost-value analysis in practical decision making.

6.8.1 The usefulness of numbers.

6.8.2 Decision levels.

6.8.3 Winners take all?

6.9 Conclusion.


Annex: An example of cost-value analysis.