Cost and benefits
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Cost and Benefits. Introduction. Is treatment X worth it?. Cost-Benefit Analysis. Devote resources to an activity until the marginal benefit equals the marginal cost. Determining Value. Willingness To Pay (WTP) Surveys Market data (compensating differentials in labor markets)

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Presentation Transcript

Introduction
Introduction

  • Is treatment X worth it?


Cost benefit analysis
Cost-Benefit Analysis

  • Devote resources to an activity until the marginal benefit equals the marginal cost.


Determining value
Determining Value

  • Willingness To Pay (WTP)

    • Surveys

    • Market data (compensating differentials in labor markets)

  • Human Capital Approach

    • Estimate future earnings, used in accidental death injury cases.


Cost effectiveness
Cost Effectiveness

  • Incremental cost effectiveness analysis


Cost utility analysis
Cost-Utility Analysis

  • CUA is CEA with utility as a measure of benefits.

  • Useful for multi-dimensional problems

  • Utility proxied by Quality Adjusted Life Years or Disability Adjusted Life Years


Quality adjusted life year qaly
Quality Adjusted Life Year (QALY)

  • Standard gamble method

  • Time trade-off method


Problems with cea
Problems with CEA

  • Whose utility function?

    • Patients or public?

    • When to measure?

    • Mean or median?

  • Non-independence of value of health and wealth and consumption patterns


  • Inequality in health

    • Americans with Disabilities act. Should their well being be considered equally?


Practical problems
Practical Problems

  • Should fixed costs be taken into account?




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