Speaking honestly, given that the incentive for the player is to go as fast as possible, I'd say more sanity would be the more appropriate of the two choices since it's effectively acting as a timer. However, I realize this might make the game way too easy, so take that with a grain of salt.

I do have a suggestion though that you might find interesting; knowing how long the level is could actually be really useful information to the player. I'm not saying add a map because that could give away too much information, but I would say a progress bar would be really handy. The further along you go through the course, the further along the progress bar gets so the player has some idea how much further they have to go. It could also add a sense of "hurry up" to the sanity meter and really add pressure to the player's snap-second decisions: do I go for this monster or do I only have time to run to the exit?

This could clutter up the player's GUI though, so ultimately the decision would be up to you.

Difficulty levels would be awesome! I could definitely see this game doing well with speedrunning and optimization communities in trying to find the fastest route through each of the levels, and adding harder and harder challenges like that would really get the competition going!