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Cost-Utility Analysis: QALYs and DALYs

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Cost-Effectiveness AnalysisCost-Effectiveness Analysis in Policy ResearchBurden of Disease MeasurementCost-Benefit Analysis in Health+2 more
CUA QALY DALY utility health-state-valuation EQ-5D

Core Idea

Cost-utility analysis (CUA) is a specialized form of cost-effectiveness analysis that measures health outcomes in quality-adjusted life-years (QALYs), combining length of life and quality of life into a single metric. One QALY equals one year lived in perfect health; a year lived with a disability or chronic condition is weighted by a utility value between 0 (death) and 1 (perfect health). QALYs enable comparison across diseases and interventions — a cancer drug that extends life by 2 years at utility 0.6 produces 1.2 QALYs, comparable to a joint replacement that improves quality from 0.5 to 0.9 for 3 years (1.2 QALYs). DALYs (disability-adjusted life-years) invert the metric: they measure years of healthy life lost to disease. Both metrics operationalize the intuition that extending a miserable life is worth less than extending a good one, enabling resource allocation that accounts for quality, not just quantity.

Explainer

Standard cost-effectiveness analysis can compare interventions for the same disease (two blood pressure drugs measured in mmHg reduction), but it cannot compare across diseases — how do you weigh a mmHg of blood pressure against a percentage of cancer recurrence? QALYs solve this by creating a common currency for health outcomes that combines quantity and quality of life into a single number.

The QALY is calculated by multiplying time in a health state by the utility weight of that state. Utility weights range from 1 (perfect health) to 0 (death), with some states valued below 0 (worse than death — e.g., severe, unremitting pain). A year of perfect health = 1 QALY. A year at utility 0.7 (moderate arthritis) = 0.7 QALYs. Five years at utility 0.5 = 2.5 QALYs. Utilities are measured using standardized instruments: the EQ-5D questionnaire (five dimensions: mobility, self-care, usual activities, pain/discomfort, anxiety/depression, each with 3-5 levels) is the most widely used, with country-specific value sets translating EQ-5D profiles into utility weights.

DALYs approach the same problem from the opposite direction — measuring health lost rather than health gained. One DALY represents one lost year of healthy life. DALYs have two components: Years of Life Lost (YLL) from premature death (comparing actual age at death to a standard life expectancy) and Years Lived with Disability (YLD), weighted by disability severity (ranging from 0 for no disability to 1 for death-equivalent disability). The Global Burden of Disease Study, coordinated by the Institute for Health Metrics and Evaluation, uses DALYs to quantify the health impact of every disease in every country — providing the data foundation for global health priority-setting.

Both metrics have limitations. QALYs assume that a QALY is a QALY regardless of who receives it — one QALY for a 20-year-old is valued the same as one for an 80-year-old, and one QALY for a wealthy person equals one for a poor person. This ignores equity concerns that many societies consider important (some argue QALYs should be weighted by severity or social disadvantage). The utility weights themselves are debatable — they vary by country, elicitation method, and respondent population. And the fundamental assumption that quality and quantity trade off linearly (two years at 0.5 = one year at 1.0) may not match individual preferences. Despite these limitations, QALYs remain the standard outcome measure for health technology assessment worldwide because no better alternative has emerged for cross-disease comparison.

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Prerequisite Chain

Understanding ZeroThe Number ZeroCounting to FiveCounting to 10Counting to 20Counting a Set of Objects Up to 20Cardinality: The Last Number CountedMatching Numerals to QuantitiesSubitizing Small QuantitiesAddition Within 10Number Bonds to 10Addition Within 20Doubles and Near DoublesDoubles Facts Within 10Near Doubles Facts Within 20Mental Math Strategies for AdditionMental Math: Adding and Subtracting TensAddition Within 100Repeated Addition as MultiplicationMultiplication as Equal GroupsMultiplication: ArraysBasic Multiplication Facts (0s, 1s, 2s, 5s, 10s)Multiplication Facts Within 100Division as Equal SharingDivision as Grouping (Measurement Division)Division: Grouping (Repeated Subtraction) ModelDivision: Fair Sharing ModelDivision as Equal SharingDivision as GroupingBasic Division FactsDivision Facts Within 100Multiplication and Division Fact FamiliesRelationship Between Multiplication and DivisionDivision Facts as Inverse of MultiplicationRemainders and Quotients in DivisionDivision Word ProblemsMulti-Step Word ProblemsSolving Multi-Step Word ProblemsMultiplication Word ProblemsDivision Word ProblemsIntroduction to Long DivisionFactors and MultiplesPrime and Composite NumbersEquivalent FractionsRelating Fractions and DecimalsDecimal Place ValueIntegers and the Number LineComparing and Ordering IntegersAbsolute ValueAdding IntegersSubtracting IntegersMultiplying IntegersDividing IntegersUnit RatesProportionsPercent ConceptConverting Between Fractions, Decimals, and PercentsOperations with Rational NumbersTwo-Step EquationsSolving Multi-Step EquationsEquations with Variables on Both SidesAngle Pairs: Complementary, Supplementary, and VerticalParallel Lines and TransversalsCorresponding AnglesAlternate Interior AnglesTriangle Angle Sum TheoremExterior Angle TheoremTriangle Inequality TheoremSimilar Triangles: AA SimilaritySimilar Triangles: SSS and SAS SimilarityProportions in Similar TrianglesRight Triangle Trigonometry IntroductionSine, Cosine, and Tangent RatiosTrigonometric Ratios ReviewRadian MeasureConverting Between Degrees and RadiansThe Unit CircleGraphing Sine and CosineGraphing Tangent and Reciprocal Trigonometric FunctionsDerivatives of Trigonometric FunctionsAntiderivativesIndefinite IntegralsBasic Integration RulesRiemann SumsDefinite Integral DefinitionProbability Density Functions and Continuous DistributionsCumulative Distribution FunctionsContinuous Random VariablesProbability Density FunctionsExpected ValueWeak Law of Large NumbersProbability Axioms and RulesConditional ProbabilityConditional DistributionsBivariate Normal DistributionNormal DistributionStandard Normal Distribution and Z-ScoresHypothesis Testing FundamentalsResearch Methods in SociologyAdvanced Research DesignCost-Effectiveness Analysis in Policy ResearchCost-Utility Analysis: QALYs and DALYs

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