10 dysfunctional years as fractions. QALYs are a standard tool in cost-effectiveness analysis in OECD countries.

Any of these measures lend themselves readily for project analysis. The mechanics are similar to those mentioned above for the evaluation of education projects. The benefits of some interventions are spread out over a number of years and hence must be discounted back to a base year, normnally the year in which the intervention occurs. If the intervention occurs over several years, then the benefits must be discounted again. If HYLG stands for the present value of the benefits of an intervention in year i, then the value of the benefits in the year in which the project is being evaluated will be:

> PV(benefits) = E ( L)I (1) **t=O (1+** r)'

## **Box** 3: **The Mechanics of HYLGs**

Consider a disease that affects one person in 20 thousand every year. Suppose that the disease usually strikes at age 15 and that of those stricken, 70 percent recover fully after 90 days of an illness; 10 percent become chronically disabled and fall ill some 30 percent of the time during the rest of their lives; and finally 20 percent die from the disease after one year of illness. What would be the benefits from a treatment that prevents this disease?

First, we calculate the days lost to the illness, given that a person falls ill. Those who die, on average die at age 16 (disease strikes at age 15 and lasts for one year). To find out how many days of life those who die lose, we need to know their life expectancy. Say that in this country it is 62 years. An individual who is stricken, then, loses 46 years of expected healthy life: one to illness and 45 years of life. This means that on average, we can expect to lose 9.2 years of healthy life, or 3,358 days (46 x 0.2 x 365). Those who recover fully lose 90 days: on average we can expect to lose 63 days of healthy life (90 x 0.7). Finally, days lost to illness and chronic disability amount to 5,127: 90 days of illness plus 30 percent of time lost due to illness from age 16 to age 62 (90 + 46 x 0.3 x 365). On average, we would expect to lose 513 days (5,127 x 0.1). The expected number of days lost to illness, given that a person falls ill, would then be given by the sum of all three effects: 3,358 + 63 + 513 = 3,934.

Second, we calculate the expected number of days lost due to illness for a given population. This number would be equal to incidence of the disease times the expected number of days lost to illness: (0.05 x 3,934) = 197 per thousand.

Finally, we calculate the benefits of preventing the disease. The benefits from any treatment that reduces the incidence of the disease would be given by the number of healthy years of life gained, which in turn would depend on the extent of coverage and efficacy of the treatment. Assuming a 95 percent effectiveness with 80 percent coverage, treatment would save [.95 x .80 x 197] 150 days per 1,000 population per year.

# **_Is a_** _life_ **_saved_** _today_ **_worth more than a_** _life saved_ **_tomorrow?_**

Equation (1) implies that a healthy year enjoyed today is more valuable than a healthy year enjoyed in ten years. This is in turn implies that a life saved today is worth more than a life saved tomorrow. The justification for this position is two-fold. First, we need to make the obvious point that when we talk about saving lives, we are really talking about prolonging lives. Second, we must also make the obvious point that life is valuable