QALYs Versus WTP

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Abstract
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 practices. Although both methods are based on individual preferences, the underlying assumptions differ. The different bases yield systematically different conclusions about the relative value of reducing health and mortality risks to individuals that differ in age, preexisting health conditions, income, and other factors. The choice of which method to use depends on judgments about what constraints should be placed on individual preferences and what factors should be considered in aggregating preferences across people.