Utilitarian or Quantile-Welfare Evaluation of Health Policy?

This paper considers quantile-welfare evaluation of health policy as an alternative to utilitarian evaluation. Manski (1988) originally proposed and studied maximization of quantile utility as a model of individual decision making under uncertainty, juxtaposing it with maximization of expected utility. That paper's primary motivation was to exploit the fact that maximization of quantile utility requires only an ordinal formalization of utility, not a cardinal one. This paper transfers these ideas from analysis of individual decision making to analysis of social planning. We begin by summarizing basic theoretical properties of quantile welfare in general terms rather than related specifically to health policy. We then propose a procedure to nonparametrically bound the quantile welfare of health states using data from binary-choice time-tradeoff (TTO) experiments of the type regularly performed by health economists. After this we assess related econometric considerations concerning measurement, using the EQ-5D framework to structure our discussion.