OBJECTIVES: An implicit assumption in cost-effectiveness analysis is that the value of the health benefit (e.g., life year or quality-adjusted life year gained) is directly proportional to the gain, irrespective of baseline life expectancy. For example, a gain of 6 months is valued the same, irrespective of whether the baseline life expectancy is 40 years (e.g., for a healthy, middle-aged adult) or 6 months (e.g., for a patient with metastatic cancer). We examined the theoretical and empirical evidence regarding the validity of this assumption. METHODS: We reviewed the theoretical and empirical literature on the relationship between the value of mortality reduction and life expectancy. We focused our attention on outcome valuation using the willingness-to-pay (WTP) and quality-adjusted life year (QALY) approaches. RESULTS: Results of the review suggest that while research has been conducted on the relationship between health gains and baseline life expectancy due to age, the relationship between health gains and baseline life expectancy due to health status remains largely unexplored. Economic theory suggests that WTP for risk reductions depends on baseline risk; however, the two theoretical arguments (i.e., "dead anyway" and proportionality) as to why this is so lead to opposite conclusions. QALYs are assumed to be independent of baseline life expectancy, but this assumption has been challenged by theorists who have proposed the use of "age-weighted" measures. Empirical studies have yielded mixed results. Stated and revealed values of life expectancy gains are often associated with baseline life expectancy, but the direction of the association is inconsistent. CONCLUSIONS: The literature gives mixed support for the assumption implicit in cost-effectiveness analysis that the value of a survival gain is directly proportional to the gain and independent of baseline life expectancy. Comparisons of cost per QALY across populations with varying life expectancies should recognize this limitation.