Social Welfare Functions and Health Policy

Social welfare functions (SWFs) allow policy evaluations to account explicitly for the distribution of well-being effects in the population, unlike conventional benefit-cost analysis. Matthew Adler discussed a framework for using SWFs to evaluate health policies at a recent CHDS seminar. Adler is Professor of Law and of Economics, Philosophy and Public Policy at Duke University. He leads the Prioritarianism in Practice Research Network along with Ole Norheim.

The methodology starts by defining a measure of well-being for individuals within the population affected by a policy. Unlike cost-benefit analysis, which estimates values in monetary terms, the SWF framework employs an interpersonally comparable well-being measure. This well-being measure is an input into a SWF function, which describes the desirability of a given set of well-being outcomes in the population. There are different possible functional forms for an SWF, including a “prioritarian” SWF—one that gives greater weight to worse-off individuals. While the SWF framework can be approximated by supplementing a traditional cost-benefit analysis with distributional weights, the direct approach provides a more robust measure of the impacts.

Adler showed how the SWF approach can be implemented and demonstrated how using different SWFs can meaningfully change how policymakers allocate resources to health policies.

Learn more: Read about Prioritarianism in Practice
Learn more: Read the publication, Fair Innings? The Utilitarian and Prioritarian Value of Risk Reduction Over a Whole Lifetime