Following the money: an econometric investigation into health valuations

Abstract In 2018, two compensating‐income variation studies, based on Household, Income and Labour Dynamics in Australia, reported sharply different monetary health values: A$42,000–A$67,000 for a full quality‐adjusted life year (QALY) gain versus A$162,000 for a 0.10 QALY loss (implying A$1.6 million per QALY under linear scaling). We embark on econometric detective work to identify the sources of these discrepancies, carefully aligning samples, cross‐examining methodologies, and uncovering methodological differences that drive the divergent results. Gain–loss framing is the largest margin (consistent with willingness‐to‐accept/willingness‐to‐pay evidence), while estimator choice (instrumental variables versus reduced form) and income equivalization further magnify differences, jointly resulting in the order‐of‐magnitude gaps with implications beyond health.