Capabilities as Menus: A Non-Welfarist Basis for QALY Evaluation

Quality-Adjusted Life Years (QALYs) are the most widely-used measure of health in cost– effectiveness analysis and cost–benefit analysis. Within a welfarist framework QALYs are consistent with people’s preferences under stringent assumptions. Several authors have argued that QALYs are a valid measure of health within an extra-welfarist framework. This paper studies the applicability of QALYs within the best-known extra-welfarist framework, Sen’s capability approach. We propose a procedure to value capability sets and provide a foundation for QALYs within Sen’s capability approach. We show that, under appropriate conditions, the ranking of capabilities can be represented locally by a QALY measure and that a shadow price for QALYs can be defined