Pergamon Wor/r/De~~/oprner~r, Vol. 26, No. 2, pp. 307-3 IO. 199X 0 1998 Elsevier Science Ltd All rights reserved. Printed in Great Britain 0305-750X/98 S19.00+0.00 PII: s0305-750x(97)10019-5 DALY s: Efficiency Versus Equity* zyxwvutsrqponmlkjihgfedcb SUDHIR ANAND St. Catherine’s College, Oxford, CT. K. and KARA HANSON Harvard School of Public Health, Boston, Massachusetts, U.S.A. Summary. - The Disability-Adjusted Life Year (DALY) is a newly-developed indicator of ill-health which provided the technical foundation for the World Bank’s (1993) World Drvrlrymwnr Report: Investing in Health. In this paper we expose some of the value choiceq embodied in the DALY- those relating to disability weights, age-weighting. and discounting. We identify the equity consequences of using the efficiency criterion of aggregate DALY-minimization as a tool for health- sector planning. 0 1998 Elsevier Science Ltd. All rights reserved I INTRODUCTION The Disability-Adjusted Life Year (DALY) is a newly-developed indicator of ill-health which pro- vided the technical foundation for the World Bank’s (World Bank, 1993) World Development Report: Investing in Health. Subsequently, the DALY has been promoted by both the World Bank and the World Health Organization as a tool for health-sector planning-in descriptions of the burden of disease and in cost-effectiveness analysis to prioritize health interventions. Its proponents argue that DALYs have advantages over some other measures of ill-health such as Potential Years of Life Lost, in that DALYs incorporate both time lost to premature mortality and time spent with disability. Furthermore, it is suggested that “efficiency” of resource allocation will be enhanced by using DALYs to reorient expenditure from high- to low-cost per DALY (averted) interventions. The “efficiency” goal can, of course, be pursued with respect to any criterion- but the value of pursuing it will rest on the acceptability of the criterion that is chosen. DALYs combine “time lived with a disability and [the] time lost due to premature mortality” (Murray. 1994, p. 441). Years lost from premature mortality are estimated with respect to a standard expectation of life at each age. Years lived with disability are translated into an equivalent time loss by using a set of weights which reflect reduction in functional capacity, with higher weights corresponding to a greater reduction. In both cases, time spent in the state is adjusted using a set of “value choices” (Murray, 1994, p. 430) which weight time lived at different ages and in different time periods differ- ently (through age-weighting and discounting. re- spectively). By definition, DALYs are a “bad” which should be minimized.’ To calculate the DALYs from morbidity and premature mortality. a standard expectation of life at birth of 82.5 years is chosen for women and of 80 years for men. The gender gap of 2.5 years is argued to correspond to the “biological difference in survival potential between males and females” (Murray. 1994, p. 434). As an illustration, Table 1 shows the estimate of time lost and of its value- through age-weighting and discounting-from the death of a female and male infant, respectively.’ DALYs are used for at least two separate exercises. Firstly, there is the measurement of the quantity of ill- health (the so-called “burden of disease“) which involves adding up the DALYs from premature mortality and morbidity in a given population. This total quantity of illness can be disaggregated by such factors as age, sex, disease, and geographical region. Secondly, there is the exercise of allocating resources to different health interventions through cost-effec- tiveness analysis. The objective here is to minimize *Anand’s research was supported by the John D. and Catherine T. MacArthur Foundation. For helpful comments or discussion, the authors are grateful to Lincoln Chen and Amartya Sen. A technical and more complete investigation of some of the issues contained in this paper appears in Anand and Hanson (1995). Final revision accepted: September 3, 1997. 307