BOOKS OF RtfiDIfGS - PAHO/WHO

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Application of Cost-Benefit Analysis to Health Services 1
between increase in risk and willingness to pay to cover it? (54). Moreover, does not the
value of a gain depeno somewhat on the starting point? (62). If all payments come from
tbl consumer, the distribution of income must exert a sizeable influence; by how much
would will igneas to pay change if the task of reducing the death rato were viewed es a
collective responsibility that is fully financed from public funds?
Titmusa (63) regards the value of human life as priceless and beyond valuation. Yet
implicit values are being placed on human life whenever public policy decisions are made
on highway design, auto safety, airport landing devices and traffic control measures.
mining hazards, factory safeguards, etc. In emphasizing voluntary giving, the sense of
community that the gift relationship in blood both reflects and promotes, Titmuss seems
to be pointing to a large external benefits component that is neglected when life-time
earnings are taken as the proxy for the value of human life. Although the concern for the
altruistic motive is salubrious and appropriate, the conclusion does not follow that human
life is priceless.
As Mishan (54) observes, a rough measure of a precise concept is superior to a precise
measure of an erroneous concept. It is agreed that the notion of the value of human life,
apart from livelihood, is sound. A numerical estimate of this value would be useful in
comparing the worthwhileness of alternative programs. Comparisons of programs would
gain in relevance and aptness if all benefits were counted, including the saving of human
life or improvements in life expectancy. This potential gain is much more likely to be
realized if all benefits are entered into the model, rather than if some appear only in
footnotes.
I am unable to say at this time how such a number or set of numbers for the several
age groups can best be derived. Certainly Schelling's questionnaire method (61) can be
improved. Perhaps the implications of past or existing public policies will yield a narrower
range than one expects. It is conceivable that a committee can do a better job in the
realm of values than in the realm of fact. In any event, the value of human life is probably
higher for identified and known individuals than for members of statistical populations. If
so, incurring extraordinarily large expenditures in behalf of the former is far from
conclusive evidence of irrational behavior.
Weisbrod (13, p. 96) avoided dealing with the problem of valuing intangible benefits
by assuming proportionality to tangible benefits. This is an unsatisfactory solution, given
the'differential impacts of various diseases on life expectancy, disability, and morbidity.
However, a solution to this problem was not needed when the emphasis of public
expenditures analysis shifted from cost-benefit to cost-effectiveness. To repeat, in
cost-effectiveness analysis outcome is expressed in physical terms, e.g. iife years gained,
and the task of analysis is to discover the program that will yield the desired outcome at
the lowest unit cost. In the health services it goes without saying that desired outcome
incorporates a constant level of quality of care, or at least an acceptable level.
Cost of Progrum
The estimate of the cost of a proposed program, with which benefits are compared,
poses no special difficulties. A budget is prepared in terms of the market prices of inputs,
which may be adjusted by shadow prices when warranted.
If programs vary in size, it is appropriate to examine the possibility that economies of
scale exist (14, pp. 82-83). However, since health services are rendered in the local area,