Apparently in the history of economics for a while the early thinkers in the field were a bit perplexed by what was known as the diamond-water paradox.Why was is that diamonds were worth so much more that water even though water was necessary for life.
The story goes that in the late 1800s three economists working independently devised what became known as the subjective marginal theory of value. Their notion was that value was not inherent in an object but value was in the eye and mind of the valuer.There is no such thing as value without a valuer.Further the valuers made their evaluation at the margin. A man living by a lovely stream of potable water would pay little or nothing for a glass while a person lost in the desert without supplies would pay almost anything for a drink.The early economists were considering things from the view point of mankind in general for whom water was essential for life but the value of a given increment of water was evaluated by individual people each with their own set of values and needs and circumstances which could change over time.It was the value at the margin, the marginal value, and it was subjective.
The American College of Physicians (ACP) has announced a program called" High value,cost conscious care" ( HVCC). See here for some details.
Value is not inherent in things but is subjective but there may be objective proxy-measures of value such a market value. However, these measures in turn depend on the subjectivity of the individuals who make the choices. I have no reason to believe that the leaders of ACP have anything but good intentions in this initiative but I wonder if their notion of value is stuck somewhere in the early 19th century.
Here is a quote from ACP that seems to say we can have our cake and eat it too.
"[ the initiative is] to help physicians and patients understand the benefits, harms, and costs of an intervention and whether it provides good value, and to slow the unsustainable rate of health care costs while preserving high-value, high-quality care."
My question is in regard to how will "good" or "high "value be determined. It seems like the history of the notion of value in the world of economics has lead to the widely accepted concept that value is subjective.Does this now say that after all value can really be objectively determined? So the advocates and practitioners of cost effectiveness would seem to say. I should add in fairness that the authors of the quoted Annals article do state that in the final analysis a subjective judgement in required.At the end of the analytic process someone or some group makes a subjective judgment.Is the benefit greater than the risks or does treatment x cost "too much".Too much in the judgment of whom. Will the value being decided by the patient to whom the risk and benefits accrue or will the value be decided by a group of medical experts after making a cost effectiveness "determination".
In the March 7,2013 issue of the NEJM there is a thoughtful commentary by Dr. Lisa Rosenbaum entitled "The Whole Ball Game-Overcoming the Blind Spots in Health Care Reform" which addresses certain aspects of the notion of value in health care. She says:
"Value in health care, however,depends on who is looking , where they look and what they expect to see....". Are we fooling ourselves if we believe that efforts to reign in health care cost can be done by only eliminating things of low value?"
That quote seems to express the notion of subjective value- that individuals subjectively evaluate a given event ( test or treatment ) from her own point of view which may or may not coincide with a determination of value by practitioners of cost effectiveness and cost benefit analysis who after they carry out the various elements of the statistical package make their subjective evaluation cloaked though it may be in the robes of a purported objective analysis.
5/30/14. several minor corrections made in spelling and punctuation.