Level-dependent equity weights

Abstract

This chapter explains how you can use level-dependent social welfare functions (SWFs) to evaluate health distributions in a manner that is founded on explicit, challengeable, and consistent ethical principles. A level-dependent social welfare function (SWF) weights health gains for one person or group relative to another as a function of their absolute health levels. By contrast, a rank-dependent SWF weights health gains for one person or group relative to another as a function of their health ranks in the wider population. A level-dependent SWF is also called a prioritarian SWF. The basic prioritarian principle is a specific value judgment giving priority to the worse-off based on their absolute level of health. The aim of this chapter is to describe level-dependent SWFs and how they can be used to conduct equity-efficiency trade-off analysis. A SWF can be consistent with many different sets of weights, which vary according to the chosen value of an equity parameter. We show how level-dependent equity parameters can be used to perform a systematic sensitivity analysis of how different degrees of concern for the worse-off have different policy implications.