The value of lives in New Zealand.

Abstract

There is currently a pronounced lack of uniformity in the values placed on a life or a QALY by different New Zealand government entities taking actions designed to save lives or QALYs. With some limited exceptions, equity suggests that all QALYs be equally valued, and therefore likewise for all lives with the same residual life expectancy and quality of life. Prima facie, this is attainable by adopting the best (and only credible) New Zealand estimate of the value of life (the NZTA's $12.5 m value of the life of a median age person in good health), and using that or its QALY equivalent as a cutoff figure to determine interventions throughout the public sector. This provides opportunities for large welfare gains, from curtailing existing interventions that currently use much larger cutoff values (such as earthquake strengthening regulations) and expanding interventions that currently use much smaller cutoff values (such as public health spending). However, the NZTA's figure is only applicable to small increases in lives saved, and must decline as the number of additional lives saved increases. This relationship should be estimated.