VPFs, VOLYs, and QALYs: shut up and multiply
One of the benefits of subscribing to various kinds of updates from government departments is when you catch something like this: A scoping study on the valuation of risks to life and health: the monetary Value of a Life year (VOLY). A title only an economist could love?
This academic study aims to help the government deliver ‘value for money’ by analysing different options for ‘risk reduction’.
It is also the government’s duty to deliver ‘value for money’. This requires valuation of these different types of risk reductions. Her Majesty’s Treasury ‘Green Book’ guidance sets out different approaches to valuing life and health impacts:
Value of a Prevented Fatality (VPF): values small changes in fatality risks
Value of Statistical Life Year (value of a SLY or VOLY): values the impact of risks to the length of life
Quality Adjusted Life Year (QALY): values changes in health-related quality of life and length of life
The report should be of interest to those within the EA community as well as those interested in cost-effectiveness analysis and appraisal of government policy.
Discounting and the rate of time preference is discussed, but exponential discounting is assumed throughout. As the ‘rational’ discount rate has been much discussed in academic philosophy circles since Ramsey, and especially within effective altruism e.g. in the case for longtermism, this section referring to non-exponential discounting caught my eye (emphasis added).
behavioural biases are not included in the above framework. In particular, if non-standard discounting (i.e. non-exponential discounting, or time preferences that imply inconsistent choices over time) prevails at the level of the respondent, then it would be necessary to account for each respondent’s personal discount function, as well as their personal rate of time preference, when calculating the discounted gains in life expectancy
It might not be that unusual to think of each person as having their own personal discount function. Or more radically, some people might not discount the future at all, but give their future wellbeing an equal weighting to their present wellbeing. We might even extend this impartiality to the wellbeing of future people, as in Parfit’s 1984 book Reasons and Persons, arguably an early statement of philosophical longtermism.
I’m interested to know if there are many government departments beyond HMT and the ‘Green Book’ that look into policy appraisal with these sorts of tools. Does the use of VOLYs or QALYs correlate with the proportion of economists within a department? When is it not desirable to reduce humanity to mere numbers in this way? If anyone has answers to these questions, feel free to let me know!