Academic journal article Journal of Forensic Economics

Valuing Nonfatal Quality of Life Losses with Quality-Adjusted Life Years: The Health Economist's Meow

Academic journal article Journal of Forensic Economics

Valuing Nonfatal Quality of Life Losses with Quality-Adjusted Life Years: The Health Economist's Meow

Article excerpt

I. Introduction

Nonfatal injuries and illnesses cause impairment that can result in the loss of functional capacity and reduce quality of life (Nagi, 1991). When impairment is the result of injury or toxic exposure, juries often are asked to place a value on quality of life losses. Their judgments typically are based on gut reactions to anecdotal testimony and to medical forecasts about the losses involved, rather than on available scientific evidence. This paper describes empirically validated techniques that forensic experts can apply to help guide these jury valuations. Applying them widely may increase the predictability of jury awards for nonfatal injury and illness (Miller, 1988). These techniques require use of a metric that scientifically measures the utility loss associated with health impairment. Health economists regularly employ such a metric, termed "quality-adjusted life years" (QALYs), to evaluate pharmaceutical or clinical protocols that are intended to improve health-related quality of life. QALYs are a systematic, replicable measure of how peoples' utility levels are affected by their health status. Berla et al. (1990) first described a judgmental scaling method for valuing hedonic damages resulting from non-fatal injury. QALYs can serve this role better; because they are systematic and replicable (i.e., verifiable), they meet the dictionary definition of science (G. & C. Merriam Co., 1974). They typically are a non-monetary metric indicating the percentage of someone's quality of life lost to an injury or illness. In that form, they have entered the mainstream. They are featured in virtually all current health economics texts that discuss cost-effectiveness analysis, play a critical role in the new drug approval process, are widely measured worldwide by the World Health Organization and collaborating governments (often in the form of disability-adjusted life years or DALYs), and get heavy coverage in leading health economics journals. QALYs can be monetized, yielding what courts are now calling hedonic damage estimates for personal injuries (Miller et al., 1989).

The study of utility, defined as "the ability of goods and services to satisfy human wants" (Greenwald et al., 1973), originated in economics. Economists have extensive training and clear expertise in its measurement. Whether or not a forensic economist is involved in cases that generate hedonic damage estimates for injury, the ability to offer expert testimony about the percentage of a plaintiffs quality of life lost to an injury or illness (measured in utility terms, not dollars) probably belongs in a well-equipped forensic toolbox. Like medical testimony about functional losses, without dollar values, this quantification can better inform juries faced with the task of compensating the quality of life lost. If an economist is going to properly construct a hedonic damage estimate for an injury or challenge one in a courtroom where admissibility has been established, utility loss measurement is the critical step. Importantly, if a judge rules against expert testimony on hedonic damages, this severable step could well survive, leaving a large part of the expert's planned testimony intact. Conversely, if sloppily done (which it almost always has been in hedonic damage estimates for injury), it provides a defense team whose economist knows the QALY literature with a ready point of attack. Picture the hedonic damages expert or a psychologist associate, who just testified that a broken arm caused a 35% loss in quality of life, confronted by a defense lawyer with a handful of unfamiliar published studies (several exist) showing the QALY loss due to a broken arm typically is 5% to 15%.

This paper's purpose is to define, categorize, and demonstrate the usefulness of different QALY scales in a forensic economics context. Section II defines QALYs, and Section III discusses competing approaches. With this background, Section IV reviews selected QALY scales. …

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