Value Judgement

Value Judgement in Health Economics

A value judgement in health economics is a normative premise, a statement about what is better or what should be done, which sets it apart from a factual claim that data could confirm or refute. A trial can show how many QALYs a cancer drug adds, but whether a QALY near the end of life should count for more than one gained by a healthy adult is a question of values. Every economic evaluation rests on premises of this kind, including the choice of outcome measure, whose preferences value health states, how gains to different people are weighed and what counts as an acceptable opportunity cost. They cannot be avoided, so the useful questions are which judgements an analysis makes, who is entitled to make them and how far the result depends on them.

Facts, values and the economist's role

The sharp separation of facts and values in economics owes much to Lionel Robbins, whose Essay on the Nature and Significance of Economic Science (1932) held that economics deals with ascertainable facts and ethics with valuations and obligations. He saw a logical gulf between positive and normative generalisations and wrote that propositions involving "ought" differ in kind from those involving "is". He still wanted economists to think widely about ethics, and argued that disagreements about means can often be settled by analysis, while disagreements about ends cannot be settled by any science.

Daniel Hausman, writing in the Stanford Encyclopedia of Philosophy, reports that most economists accept a reasonably clear distinction between facts and values and regard most of economics as a positive science that helps policy makers choose means, not ends. He gives reasons to doubt that the line is as clean as it looks. Economists have to interpret goals that policy makers specify incompletely, and their own work is a human activity governed by values. Much of economics is also built around a normative theory of rationality.

Value judgements built into welfare economics

Welfare economics is the part of economics that openly rests on value judgements. Brouwer, Culyer, van Exel and Rutten (2008) quote Boadway and Bruce's account that the welfare economist judges a policy in terms of explicitly stated ethical criteria and not the analyst's own values. They list four tenets of the neoclassical framework, namely the utility principle, individual sovereignty, consequentialism and welfarism, the last being the proposition that the goodness of a situation is judged solely by the utility levels people attain. They describe this framework as built on explicit normative principles.

The Pareto principle asks for very little. Hausman explains that if some people prefer one outcome and nobody prefers the other, the first is a Pareto improvement, and the conclusion needs no comparison of one person's welfare with another's. Policies almost always have losers as well as gainers, so economists extended the idea to the potential Pareto improvement behind cost-benefit analysis, where gainers could in principle compensate losers. Hausman notes that the compensation is hypothetical and that the justice of the resulting gains and losses is irrelevant to the test. Because willingness to pay depends on wealth, cost-benefit analysis weights the preferences of the rich more than those of the poor. An unweighted cost-benefit analysis of a screening programme therefore carries a distributional judgement that nobody stated.

A social welfare function makes the distributional judgement explicit. Brouwer and colleagues describe the Bergson and Samuelson function as allowing analysts to choose among Pareto optimal distributions once an explicit normative choice about distribution has been made, the matter on which the Pareto criterion is silent.

Scientific and social value judgements in NICE appraisal

Rawlins and Culyer (2004), then chair and former vice chair of NICE, separated two kinds of judgement that appraisal committees make. Scientific value judgements concern what is good and bad in the available science. Social value judgements concern what is good for society. They gave as a fundamental value judgement the view that efficiency in health care means maximising population health subject to the resources available, and they described the use of the QALY as embodying the social value judgement that counting only gains in life expectancy would omit important dimensions of human welfare.

The equal treatment of QALYs is the best known example. Rawlins and Culyer explain that most appraisals assumed that "a QALY is a QALY is a QALY", giving the same weight to a QALY whatever the age, sex or deservedness of the person who gains it or how many QALYs they have already had. They state that the decision to give no differential weight is itself the result of a social value judgement. They also wrote that NICE and its advisory bodies have no particular legitimacy to determine the social values of those served by the NHS, and that NICE formed a Citizens Council so that these values would resonate broadly with the public.

NICE later replaced its social and scientific value judgements document, first published in 2005, with its principles, which its website says focus on the morals, ethics and values that underpin its recommendations. The principles explain that committees balance the most overall benefit for the greatest number against fairness and respect for individual choice, and that NICE cannot apply the rule of rescue because overall population need is the primary consideration. The NICE manual (PMG36, section 6.1.7) has committees consider NICE advice on scientific and social value decisions and points to those principles for the social value judgements to consider.

Where the judgements sit in a cost-effectiveness analysis

A cost-utility analysis for NICE contains several value judgements fixed in advance by the reference case. Rawlins and Culyer placed the main efficiency judgements in the measure of health and the scope of costs and benefits.

PMG36 counts value judgements among its decision-making modifiers. Section 6.2.10 allows a committee, in exceptional circumstances, to accept a QALY weighting different from the reference case, and requires any such departure to be supported by reason, coherence and available evidence. Section 6.2.11 defines decision-making modifiers as factors that go beyond QALYs, and value judgements, which can be applied through committee discussion or through QALY weighting. The severity weights in table 6.1 depend on absolute and proportional QALY shortfall, the health lost with standard care. Section 6.3.2 asks for net health benefit at GBP 25,000 and GBP 35,000 per QALY, with and without the weighting, so that its effect on opportunity cost can be seen.

Worked example with one technology and two sets of value judgements

All numbers in this example are illustrative. A new treatment for a severe condition costs GBP 40,000 more per patient than standard care and adds 1.25 QALYs. The evidence stays the same in every step, and only the value judgements change.

$$NHB = w \, \Delta E - \frac{\Delta C}{\lambda}$$

where $NHB$ is net health benefit in QALYs per patient, $w$ is the QALY weight, $\Delta E$ is the incremental QALY gain, $\Delta C$ is the incremental cost in GBP and $\lambda$ is the cost per QALY at which health is assumed to be displaced elsewhere in the NHS.

1. Equal weights. With $w = 1$, the ICER is 40,000 / 1.25 = GBP 32,000 per QALY.

2. Health displaced. At GBP 25,000 per QALY the extra spending would buy 40,000 / 25,000 = 1.60 QALYs elsewhere, and at GBP 35,000 it would buy 40,000 / 35,000 = 1.14 QALYs.

3. Net health benefit with equal weights. At GBP 25,000 it is 1.25 minus 1.60, or minus 0.35 QALYs, a net loss. At GBP 35,000 it is 1.25 minus 1.14, or 0.11 QALYs.

4. Apply a severity judgement. Suppose patients with standard care have an absolute QALY shortfall of 13 and a proportional shortfall of 0.88. Both fall in the middle band of table 6.1, so the weight is 1.2 and the weighted gain is 1.25 × 1.2 = 1.50 QALYs. The weighted ICER is 40,000 / 1.50 = GBP 26,667 per QALY.

5. Net health benefit with the severity weight. At GBP 25,000 it is 1.50 minus 1.60, or minus 0.10 QALYs. At GBP 35,000 it is 1.50 minus 1.14, or 0.36 QALYs.

6. Interpretation. The verdict moved because of two value judgements, where in the range the acceptable cost per QALY lies and whether severity earns extra weight. With equal weights the ICER sits near the top of the range, where PMG36 asks the committee to refer explicitly to factors such as uncertainty and uncaptured benefits. With the severity weight it sits close to the lower end. Reporting both versions, as section 6.3.2 asks, shows how much of the case rests on the judgement.

Who supplies the values in welfarist and extra-welfarist evaluation

The welfarist tradition takes values from individuals, through their preferences and willingness to pay. Brouwer and colleagues contrast this with extra-welfarism, in which outcomes such as health or capabilities replace utility and policy makers become one important potential source of value judgements. They link this to the decision-making approach of Sugden and Williams (1978), in which decision-makers are the source of values and weights in public decisions.

Brouwer and colleagues also mark the limits of the economist's role. They write that economists are not equipped to make value judgements about what the evaluation should include, but can help those who make them understand the options and their consequences, and can elicit values from samples of the relevant population. Which groups to sample is normally for the decision-maker the analyst advises.

Appraisal in money terms faces the same choices in a different currency. HM Treasury's Green Book (2026) lets analysts weight monetised costs and benefits by the income of the group that bears them, using an elasticity of marginal utility of consumption of 1.25, and requires weighted estimates to be presented alongside unweighted ones so decision makers can see the effect. It values a QALY at GBP 70,000 in 2020-21 prices. In cost-effectiveness work, equity-weighted analysis and distributional cost-effectiveness make the distributional choice explicit.

How value judgements relate to neighbouring ideas

Several concepts in this welfare set are particular value judgements. An interpersonal comparison of utility judges that one person gains or loses more than another, and a welfare criterion turns a value judgement into a decision rule. A social welfare function writes a set of distributional judgements as a formula, and the equity-efficiency trade-off measures what one such judgement costs in total health. Procedural approaches such as accountability for reasonableness do not choose the values. They set conditions on how a priority-setting body reaches and explains its choices.

Common misreadings and limits

Most errors with value judgements come from treating them as absent when they are only unstated. An unstated judgement still shapes the result, but nobody can test or contest it.

1. Explicit values make an analysis unscientific. Robbins separated ethics from positive science but still wanted economists to think about ethical questions, and stating a judgement leaves the evidence unchanged.
2. Positive analysis is free of values. Hausman gives several reasons why the boundary is blurred.
3. Cost-benefit analysis avoids distributional judgements. By counting each pound of willingness to pay equally, it gives more weight to the preferences of richer people unless weights are applied.
4. Equal QALY weights are neutral. Rawlins and Culyer state that giving no differential weight is itself a social value judgement.
5. Economists should choose the values. Brouwer and colleagues see economists as informing the choice, and Rawlins and Culyer held that even NICE lacked particular legitimacy to set society's values.
6. Only social judgements matter. Scientific value judgements about the quality and relevance of evidence also shape a recommendation, and committees make both kinds.

Sources

• Brouwer WBF, Culyer AJ, van Exel NJA, Rutten FFH. Welfarism vs. extra-welfarism. Journal of Health Economics. 2008;27(2):325-338. https://doi.org/10.1016/j.jhealeco.2007.07.003
• Hausman DM. Philosophy of economics. In: Stanford Encyclopedia of Philosophy. Substantive revision 4 September 2018. Sections 2.1 and 6. https://plato.stanford.edu/entries/economics/
• HM Treasury. The Green Book (2026). Updated 28 October 2026. https://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-government/the-green-book-2026
• National Institute for Health and Care Excellence. NICE technology appraisal and highly specialised technologies guidance: the manual (PMG36). Published 31 January 2022, last updated 13 October 2026. Table 4.1, sections 4.3.4, 6.1.7, 6.2.10 to 6.2.18 and 6.3.1 to 6.3.8. https://www.nice.org.uk/process/pmg36
• National Institute for Health and Care Excellence. Our principles. Web page, last modified 31 March 2026. https://www.nice.org.uk/about-us/our-principles
• Rawlins MD, Culyer AJ. National Institute for Clinical Excellence and its value judgments. BMJ. 2004;329(7459):224-227. https://doi.org/10.1136/bmj.329.7459.224
• Robbins L. An Essay on the Nature and Significance of Economic Science. London: Macmillan; 1932. Chapter VI, pages 132 to 134. https://cdn.mises.org/Essay%20on%20the%20Nature%20and%20Significance%20of%20Economic%20Science_2.pdf