In the PZ model, the individual simply lives (for an unspecified period of time in an
unspecified health state) or dies. Therefore, Johannesson and Meltzer’s claim of a ‘link’
between CBAand CEA depends not only on the assumption that QALYs are a valid cardinal
utility function for individuals (as argued by Johannesson, 1995) but also on the implications
of incorporating life expectancy and health status into PZ’s model. In extending PZ’s model
to include length and quality of life, we allow health status to vary by the risk and income
type x, where each type occurs with relative frequency f(x). For type x, the type-dependent
probability of illness is p(x, e(x)), where e(x) denotes the present value of the expenditures
on each individual of that type. As in PZ’s paper, our model deals only with preventive
interventions as the individual remains in whichever health state they emerge in once the
veil of ignorance is lifted (4)