Welfare economics, in the form of cost-benefit and cost-effectiveness analysis, is at present internally inconsistent and ethically unappealing. We address these issues by proposing two ethical axioms: society prefers Pareto improvements and society values lives lived at a "standard" level of health and income equally. We show that there exists a unique social preference ordering satisfying these axioms. Welfare economics is reconstructed to produce rankings consistent with this social preference ordering. The result is we should always measure willingness to pay in life years, not money units. A standardized life year becomes an interpersonally comparable unit of value.
