Abstract
Abstract Diminishing returns not only change ways to value health-related quality of life (QoL) gains but also change the proper way to combine QoL and life expectancy (LE) gains. With diminishing returns, people with lower QoL are more willing to trade gains in LE for gains in QoL than those with higher baseline QoL. This chapter introduces the total value of a medical intervention (TVMI), showing proper ways to combine QoL and LE gains using the marginal rate of substitution (MRS) between them and showing how the MRS changes with baseline QoL. Because the generalized risk-adjusted cost-effectiveness model, like standard cost-effectiveness analysis, assumes constant returns to gains in LE, this chapter demonstrates that the effects of diminishing returns to health apply only to QoL gains in the TVMI. It also provides intuitive understanding of how QoL versus LE trade-offs work and a number of actual medical and lifestyle decisions that make this QoL versus LE trade-off.
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