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«Edited by ANNE MASON Research Fellow, Centre for Health Economics University of York and ADRIAN TOWSE Director, Office of Health Economics Radcliffe ...»

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The views expressed in the Epilogue of The Principles of Practical Cost–benefit Analysis (Sugden and Williams, 1978) seem to occupy an intermediate position between the ‘Bastard science?’ account of CBA as management consultancy and the conception of the role of the health economist that is implicit in Alan’s later work.

On my (far from complete) reading of Alan’s work in health economics, his central research programme was a form of CBA, in the main senses in which he defined CBA in ‘Bastard science?’. It was prescriptive, designed to assist choices about the allocation of resources within publicly financed


healthcare systems. And it was committed to the aim of making inputs and outputs as commensurable as possible. The whole point of the QALY, for which he was such a dedicated advocate, was to try to make the outputs of the healthcare industry commensurable with one another. Alan was always clear-sighted in recognising that priority setting was an inescapable part of medical decision making, and that allocative efficiency implied a shadowprice for a QALY (or shadow-prices for QALYs accruing to different classes of beneficiary). However, he never accepted that QALYs should be valued in terms of willingness to pay. (This was what was at dispute in the meeting in 2003, which I mentioned in the introduction. In a reprise of the York of the 1970s, but with some interesting re-alignments of ideological positions, Mike Jones-Lee and I argued for the willingness-to-pay approach, while Tony Culyer inclined to Alan’s position.) In this sense, Alan maintained his commitment to the legitimacy of postulated values.

However, Alan’s conception of the ‘client’ – the audience to which his work was addressed, and the source of postulated values – seems to have undergone some change. He sought to engage, not only with public decision makers, but also with the wider community of people who use public health services and who pay for them through their taxes. Crucially, he sought to engage with them as citizens and not as consumers.

In a paper of 1988, with the title ‘Priority setting in public and private health care: a guide through the ideological jungle’, Alan nails his own colours to the mast. He argues that, despite the messy mix of public and private elements that we find in all real healthcare systems, there is a fundamental ideological divide between ‘libertarian’ and ‘egalitarian’ viewpoints about the provision of health care. In a libertarian healthcare system, the ‘dominant ethic’ is ‘willingness and ability to pay’, while in an egalitarian system, it is ‘equal opportunity of access for those in equal need’ (Williams, 1988, p. 174). Alan asks us to commit ourselves to one ethic or the other: ‘Each of us must decide for ourselves where we stand in that particular configuration of attitudes, and be honest with ourselves and with others about it’. He declares himself an egalitarian. Although these commitments are made by us as individual citizens, Alan argues that what is ultimately required is a collective decision about which of the two ideological positions is to govern the provision of health care in a given political community.

He rejects the suggestion that there can be a mixed solution, of the kind that a contractarian might favour, in which there is a socialised system of health care for those who value social insurance and are prepared to pay for it collectively, and a market-based system for those who choose to opt out and

provide for themselves:

–  –  –

respect the ideological position of the minority, provided it is not actually subversive. The trouble with private systems, in my view, is that they become ‘subversive’ if permitted to play a significant role in a mixed system, because public systems rely on strong feelings of social solidarity (the rich must help the poor, the healthy the sick, the wise the foolish, the well-informed the ignorant, and so on), whereas private systems exist precisely to enable the rich, healthy, wise and well-informed to ‘opt out’ and look after themselves.

(Williams, 1988, p. 182) The implication is that a fundamental collective decision has to be made about which set of values is to predominate. When it comes to the setting of priorities, each type of healthcare system ‘has to be judged according to its own lights, i.e. according to its own ideology’ (Williams, 1988, p. 183). In his work as a health economist, Alan starts from the premise that, in the UK, a collective decision has already been made in favour of the use of egalitarian values. This prior decision sets the ground rules for political debate about healthcare priorities.

Thus, in a discussion piece on age-based rationing, published in the British Medical Journal (BMJ) in 1997, Alan poses the question: Whose values should count in a social insurance setting? He asks us to suppose that older people are willing to pay more than younger people for health improvements for themselves. Is that relevant for the setting of priorities in the NHS? Alan insists it

is not:

But did we not take the NHS out of that [private market] context precisely because as citizens (rather than as consumers of health care) we were pursuing a rather different ideal – namely, that health care should be provided according to people’s needs, not according to what they were each willing and able to pay[?] A person’s needs (constituting claims on social resources) have to be arbitrated by a third party, whose unenviable task it is to weigh different needs (and different people’s needs) one against another. This is precisely what priority setting in health care is all about. So the values of the citizenry as a whole must override the values of a particular interest group within it.

(Williams, 1997a) So, Alan is declaring, the setting of healthcare priorities in the NHS must be based on judgements about relative need, made by a ‘third party’. The reference to the ‘unenviable task’ strongly suggests that the third party is a political or professional decision maker – someone like the ‘client’ of ‘Bastard science?’ or the ‘decision-maker’ of Principles of Practical Cost–benefit Analysis.

The implication seems to be that priorities are set by the decision-maker, on behalf of ‘the citizenry as a whole’.


Much more than in his earlier work on CBA, however, Alan the health economist wants to draw the citizenry into the priority-setting process. A major part of Alan’s research programme in health economics has been concerned with eliciting, from representative samples of the population, citizen-perspective judgements about marginal trade-offs between different healthcare benefits and different classes of beneficiary. In the BMJ paper, he appeals to evidence from surveys which show that most people, including the old themselves, favour giving priority to the health care of the young (see also Williams, 1997b, p. 118). The implication is that this is relevant evidence for decision makers. In addition, Alan clearly wanted to foster public debate about priorities. Thus, in the BMJ paper, he offers the hope that ‘reasonable limits’ on the demands for health care that the old can make on their fellow citizens can be set ‘with fairly general consent’, and (as an elderly man) he appeals to the members of his generation to exercise restraint in the political demands they make on the healthcare system.

As an example of Alan’s conception of the relationship between the decision maker and the community, consider the following passage. He is responding to an argument by Amartya Sen that the principle of non-discrimination between the sexes in the delivery of health care should take priority over the pursuit of equality in lifetime health experience. (Since men have shorter life expectancy than women, equalising access to QALYs between the sexes would require discrimination in favour of men.) Alan notes that, following Sen, one might draw up a list of ‘possible axes of discrimination’ and make a priori moral judgements about the acceptability or unacceptability of discrimination on

each axis:

But this is not the path I would take. I would prefer to find out from people generally at what point they would be willing to discriminate (and how strongly) when told the amount of damage such a moral constraint is causing to the important aim of reducing inequalities in lifetime experience in health... I would then compare the median trade-off rate from my representative sample of the population with the shadow price of the restriction as it currently operates, and then decide, in the light of the results, whether to accept the status quo or start thinking of ways of tightening up or relaxing the moral constraint.

(Williams, 2003, p. 65) I take it that, by ‘the path I would take’, Alan means the path that he would take as a public decision maker, charged with setting healthcare priorities. He is disagreeing with Sen on two levels. As a good economist, he is rejecting the idea of absolute moral constraints in favour of marginal trade-offs between different objectives. But he is also rejecting the idea that public decisions should be governed by the moral principles that decision makers (or moral philosophers) deem to be good or right. Instead, he proposes to investigate


the judgements that are in fact made by informed citizens. Notice that his survey respondents are not being asked to compare different combinations of healthcare benefits and costs for themselves; they are being asked to play the role of third-party arbitrator. Notice also that Alan’s decision maker appears to be reserving to himself the final decision about what to do ‘in the light of the results’. It seems that the survey of citizen judgements is intended to inform that decision, not to make it.

There is, I suggest, an essential continuity from the account of CBA in ‘Bastard science?’, through the ‘decision-making approach’ of The Principles of Practical Cost–benefit Analysis, to Alan’s approach to health economics.

Throughout, Alan has been committed to a conception of political decisionmaking in which policy options are assessed in relation to an objective which in some way expresses a collective judgement of the relevant community.

His inclination, I think, has always been to see applied microeconomics as addressed to an imagined public decision maker who is ultimately responsible for deciding, on behalf of the community, what the collective objective is to be. He has consistently rejected the idea that this objective can be constructed from the preferences that individuals reveal as consumers, whether in the market or in response to questions about their willingness to pay for private benefits. However, and particularly in his later work, he has expected public decision makers to be responsive to the judgements that individuals make as informed citizens. My contractarian leanings prevent me from endorsing this approach; but no one can do more than Alan to make it reasonable.


My work on this paper was supported by the Economic and Social Research Council (award no RES 051 27 0146).

REFERENCES Jones-Lee M (1976) The Value of Life: an economic analysis. London: Martin Robertson and Chicago University Press.

Little I and Mirrlees J (1974) Project Appraisal and Planning for Developing Countries.

London: Heinemann Educational.

Mishan E (1971) Cost–benefit Analysis. London: Allen and Unwin.

Sugden R (1972) Cost–benefit analysis and the withdrawal of railway services. Bulletin of Economic Research 24: 23–32.

Sugden R (2005) Coping with preference anomalies in cost–benefit analysis: a marketsimulation approach. Environmental and Resource Economics 32: 129–60.

Sugden R and Williams A (1978) The Principles of Practical Cost–benefit Analysis. New York, Oxford: Oxford University Press.

Wildavsky A (1966) The political economy of efficiency: cost–benefit analysis, systems analysis and program budgeting. Public Administration Review 26: 292–310.


Williams A (1972) Cost–benefit analysis: bastard science? and/or insidious poison in the body politick? Journal of Public Economics 1: 199–225.

Williams A (1988) Priority setting in public and private health care: a guide through the ideological jungle. Journal of Health Economics 7: 173–83.

Williams A (1997a) The rationing debate: rationing health care by age: the case for.

British Medical Journal 314: 820.

Williams A (1997b) Intergenerational equity: an exploration of the ‘fair innings’ argument. Health Economics 6: 117–32.

Williams A (2003) Comment on Amartya Sen’s ‘Why health equity’. Health Economics 12: 65–6.

CHAPTER 3 Alan Williams and cost–benefit analysis in health care: comments on the paper by Robert Sugden... Bengt Jönsson


For me, Alan Williams the cost–benefit analyst is synonymous with Alan Williams the leading health economist. His major research was on the methods and application of economic evaluations to resource allocation in health care.

Bob Sugden (BS) rightly points out that Williams’ 1972 paper was inspired by the shift of interest in public economics from public finance to public expenditure analysis, and particularly PPB (planning, programme, budgeting) analysis, that occurred in the 1960s, and which drew critique from political scientists like Wildavsky (Wildavsky, 1973). Economists thus come into a role as ‘management consultants’ to governments, to help improve the use of the resources raised from taxation, thus competing with the political scientists as advisors. To meet the critic there was a need to define the criteria for what was included, and not included, in a cost–benefit analysis.

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