Accounting for institutional change in health economic evaluation: A program to tackle HIV/AIDS and gender violence in Southern Africa

There has been growing interest in the application of institutionalist perspectives in the health economics literature. This paper investigates the institutionalist notion of social value and its use in economic evaluation with particular reference to a program to address HIV/AIDS and gender violence in Southern Africa (IMAGE). Institutions are the rules that govern the conduct between individuals, groups and organisations. Their social value stems from their capacity to reduce the uncertainty in human interactions thereby both reducing transaction costs and, importantly, enabling the initiation and sustainability of various activities (instrumental value). Furthermore, institutions tend to be formed around certain ethical positions and as a consequence, act in binding future decision making to these positions (intrinsic value). Incorporating such notions of social value within a conventional welfare-based measure of benefit is problematic as institutional development is not necessarily consistent with individual utility. An institutionalist approach allows for these additional domains to be factored into economic evaluation. IMAGE is an intervention to reduce gender violence and HIV through microfinance, health education and community development, and involves significant initial investment in institution-building activities, notably through training activities with program staff and community members. The key to employing an institutionalist approach to the evaluation of IMAGE is in understanding the nature of those actions that can be seen as institution-building and determining: (1) the instrumental value of follow-up activities by appropriate amortisation of transaction costs over an horizon that reflects the economies gained from the intervention; and (2) the intrinsic value of any transformation in the community through a cost-consequences approach informed by an a priori conceptual model. This case study highlights how health sector interventions can effect institutional changes and how these are captured within a theory-based economic evaluation framework.