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Of Note

Normative Health Economics?

David Hume’s dictum of 1739, “One cannot deduce an Ought from an Is,” has exerted a particularly strong influence on the scientific discipline of economics. It has laid the foundation of the distinction between “positive” and “normative” economics. Though perhaps overstated in its absolute form – it is indeed difficult to conceive an “Ought” that is not influenced in some way by what “Is”, and there are reasons to assert that many statements about “Ises” are subject to the inductive fallacy, as we accept or reject them on the basis of reasoning that itself reflects conventions and, therefore, judgments – Hume’s fundamental premise remains that “Oughts” cannot be logically derived from “Ises”.

Some antonyms:

“Is”: positive, facts, objective, descriptive, science, and true/false;
“Ought”:   normative, values, subjective, prescriptive, art, and good/bad.

(cf. Mark Blaug, 1992)

Hume’s dictum was echoed in 1904 by Max Weber’s doctrine of a value-free social science (“Wertfreiheit”: “freedom from value[s]”) and the subsequent disputes (“Werturteilsstreit”). Later, in the 1960s, the positivist dispute (“Positivismusstreit”) in German sociology again focused on the role of value judgments in social science.

In economics, a number of scholars tend to treat social welfare theory as a “normative” science. As they turn to the field of health economics, some of them are prepared to derive, from this theory, “normative” statements on the efficient organization of health service provision. This, of course, is perfectly legitimate. It may, however, create distinct problems (and misunder-standings) if and when theoretical foundations, limitations, and implicit value judgments are not exposed.

For reasons closely related to the (implicit or explicit) value judgments of social welfare theory, “extrawelfarism” has emerged as a prevailing paradigm among health economists.

In practical terms, it represents a specific variant of utilitarian thought, focused on health outcomes.
As they deviate from social welfare theory, extrawelfarists have found themselves under attack from representatives of “pure” economic theory. Without doubt, this fact has contributed to a widespread perception that extrawelfarism does appropriately address egalitarian concerns that have been raised against the “normative” interpretation for welfare theory. This may be not quite correct.

In any event, health economists often present their findings in a way non-economists – such as policy makers, physicians, patients, the public, and other groups of stakeholders – can only (mis)understand as “normative”. This may be the case for a number of reasons, including the need to simplify due to time constraints imposed on speeches and presentations, not allowing to explain critical value-loaded assumptions underlying an analysis. Sometimes, however, a normative interpretation of analyses is implied in a seemingly innocuous way, for instance by calling for more “consistency” in the implementation of the results of economic analyses. And on occasion, some economists do claim explicitly that their recommendations should be understood as prescriptive.

To be sure: there is no substitute to economic analysis if and when the opportunity cost of any resource allocation, including the delivery of health care, is a concern. Thus health economic evaluations will play an increasingly important role. They will continue to provide crucial, and sometimes counterintuitive, insights into the trade-offs inevitably associated with any health care policy. The critical point merely is that the results of these evaluations will have to be interpreted with the assumptions and the methods employed in mind, and, as a result, may have to be moderated by values outside their scope.

These issues surrounding the scope of health economic analyses are addressed in more detail in the following paper (written in German):

Kosteneffektivität und Ressourcenallokation: Gibt es einen normativen Anspruch der Gesundheitsökonomie?

In: Hermes A. Kick, Jochen Taupitz (Eds.): Gesundheitswesen zwischen Wirtschaftlichkeit und Menschlichkeit, Münster: LIT-Verlag 2005, pp. 37-112.

This subject was also addressed at the 5th World Congress of the International Health Economics Association (iHEA) in Barcelona, Spain, on July 13, 2005:

Michael Schlander:

Economic evaluation of medical interventions: answering questions people are unwilling to ask?

Michael Schlander:

Book of Abstracts

pp. 354-355

Subsequent publications dealt with the meaning and the implications of “efficiency” (2014; 2017) and with the author’s „QALMs about QALYs” (2010):

Michael Schlander:

Measures of efficiency in health care: QALMs about QALYs?

Z. Evid. Fortbild. Qual. Gesundh. Wesen 104 (2010) 209–226.

With online Supplement

Michael Schlander, Silvio Garattini, Søren Holm, Peter Kolominsky-Rabas, Erik Nord, Ulf Persson, Maarten Postma, Jeff Richardson, Steven Simoens, Oriol de Solà-Morales, Keith Tolley, Mondher Toumi:

Incremental cost per quality-adjusted life year gained? The need for alternative methods to evaluate medical interventions for ultra-rare disorders.

J. Comp. Eff. Res. 3,4 (2014) 399–422.