IDEAS home Printed from https://ideas.repec.org/a/sae/medema/v17y1997i1p107-117.html
   My bibliography  Save this article

Good Technologies Gone Bad

Author

Listed:
  • Charles E. Phelps

Abstract

Cost-effectiveness (CE) ratios vary considerably, not only across interventions, but within single interventions. Using a simple decision-tree model of the treat-vs no-treat decision to organize the analysis, four potential errors leading to these within-treatment differences in CE ratios are identified. These errors arise from estimates relating to 1) prior probabilities of disease; 2) treatment efficacies; 3) costs of treatment; and 4) patient preferences. Systematic biases, where present, suggest overuse of medical interventions. For diagnostic tests, two additional potential sources of error are con sidered (using a simple decision tree incorporating both test and treat decisions). These involve 5) sensitivity and specificity of the diagnostic test and 6) inappropriate choice of "cutoff" to determine abnormal patients, in part arising from errors in esti mating prior probability of disease. Key words: cost-effectiveness; biases; errors; re source use; utilities. (Med Decis Making 1997;17:107-117)

Suggested Citation

  • Charles E. Phelps, 1997. "Good Technologies Gone Bad," Medical Decision Making, , vol. 17(1), pages 107-117, February.
  • Handle: RePEc:sae:medema:v:17:y:1997:i:1:p:107-117
    DOI: 10.1177/0272989X9701700113
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0272989X9701700113
    Download Restriction: no

    File URL: https://libkey.io/10.1177/0272989X9701700113?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Woodward, Robert S. & Warren-Boulton, Frederick, 1984. "Considering the effects of financial incentives and professional ethics on `appropriate' medical care," Journal of Health Economics, Elsevier, vol. 3(3), pages 223-237, December.
    2. Charles E. Phelps & Alvin I. Mushlin, 1988. "Focusing Technology Assessment Using Medical Decision Theory," Medical Decision Making, , vol. 8(4), pages 279-289, December.
    3. Viscusi, W Kip, 1989. "Prospective Reference Theory: Toward an Explanation of the Paradoxes," Journal of Risk and Uncertainty, Springer, vol. 2(3), pages 235-263, September.
    4. Charles E. Phelps, 1992. "Diffusion of Information in Medical Care," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 23-42, Summer.
    5. Dranove, David, 1988. "Demand Inducement and the Physician/Patient Relationship," Economic Inquiry, Western Economic Association International, vol. 26(2), pages 281-298, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abe C. Dunn & Adam Shapiro & Eli Liebman, 2011. "Geographic Variation in Commercial Medical Care Expenditures: A Decomposition Between Price and Utilization," BEA Working Papers 0075, Bureau of Economic Analysis.
    2. Yizhe Xu & Tom H. Greene & Adam P. Bress & Brandon K. Bellows & Yue Zhang & Zugui Zhang & Paul Kolm & William S. Weintraub & Andrew S. Moran & Jincheng Shen, 2022. "An Efficient Approach for Optimizing the Cost-effective Individualized Treatment Rule Using Conditional Random Forest," Papers 2204.10971, arXiv.org.
    3. John Mullahy, 2001. "Live long, live well: quantifying the health of heterogeneous populations," Health Economics, John Wiley & Sons, Ltd., vol. 10(5), pages 429-440, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Barigozzi, Francesca & Levaggi, Rosella, 2008. "Emotions in physician agency," Health Policy, Elsevier, vol. 88(1), pages 1-14, October.
    2. Phelps, Charles E., 1995. "Welfare loss from variations: further considerations," Journal of Health Economics, Elsevier, vol. 14(2), pages 253-260, June.
    3. Carlos Lerner & Karl Claxton, 1994. "Modelling the behaviour of general practitioners: a theoretical foundation for studies of fundholding," Working Papers 116chedp, Centre for Health Economics, University of York.
    4. Charles E. Phelps, 1995. "Perspectives in health economics," Health Economics, John Wiley & Sons, Ltd., vol. 4(5), pages 335-353, September.
    5. F. Barigozzi & R. Levaggi, 2005. "New Developments in Physician Agency: the Role of Patient Information," Working Papers 550, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Herrmann, Tabea & Hübler, Olaf & Menkhoff, Lukas & Schmidt, Ulrich, 2016. "Allais for the poor," Kiel Working Papers 2036, Kiel Institute for the World Economy (IfW Kiel).
    7. Seema Kacker & Tin Aung & Dominic Montagu & David Bishai, 2021. "Providers preferences towards greater patient health benefit is associated with higher quality of care," International Journal of Health Economics and Management, Springer, vol. 21(3), pages 271-294, September.
    8. Hung‐Chih Hung & Tzu‐Wen Wang, 2011. "Determinants and Mapping of Collective Perceptions of Technological Risk: The Case of the Second Nuclear Power Plant in Taiwan," Risk Analysis, John Wiley & Sons, vol. 31(4), pages 668-683, April.
    9. Steffen Huck & Wieland Müller, 2012. "Allais for all: Revisiting the paradox in a large representative sample," Journal of Risk and Uncertainty, Springer, vol. 44(3), pages 261-293, June.
    10. Currie, Janet & Fahr, John, 2005. "Medicaid managed care: effects on children's Medicaid coverage and utilization," Journal of Public Economics, Elsevier, vol. 89(1), pages 85-108, January.
    11. Stuart Peacock & Jeffrey Richardson, 2007. "Supplier-induced demand: re-examining identification and misspecification in cross-sectional analysis," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 8(3), pages 267-277, September.
    12. Kerim Keskin, 2016. "Inverse S-shaped probability weighting functions in first-price sealed-bid auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 20(1), pages 57-67, March.
    13. Moshe Levy & Haim Levy, 2013. "Prospect Theory: Much Ado About Nothing?," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 7, pages 129-144, World Scientific Publishing Co. Pte. Ltd..
    14. K.J.M. De Jaegher, 2012. "The value of private information in the physician-patient relationship: a gametheoretic account," Working Papers 12-23, Utrecht School of Economics.
    15. Nyborg, Karine, 2011. "I don't want to hear about it: Rational ignorance among duty-oriented consumers," Journal of Economic Behavior & Organization, Elsevier, vol. 79(3), pages 263-274, August.
    16. Enrico Diecidue & Peter Wakker & Marcel Zeelenberg, 2007. "Eliciting decision weights by adapting de Finetti’s betting-odds method to prospect theory," Journal of Risk and Uncertainty, Springer, vol. 34(3), pages 179-199, June.
    17. Bernard Fortin & Nicolas Jacquemet & Bruce Shearer, 2008. "Policy Analysis in Health-Services Market: Accounting for Quality and Quantity," Annals of Economics and Statistics, GENES, issue 91-92, pages 293-319.
    18. Hui Zhang & Christian Wernz & Danny R. Hughes, 2018. "Modeling and designing health care payment innovations for medical imaging," Health Care Management Science, Springer, vol. 21(1), pages 37-51, March.
    19. Alarie, Yves, 2000. "L’importance de la procédure dans les choix de loteries," L'Actualité Economique, Société Canadienne de Science Economique, vol. 76(3), pages 321-340, septembre.
    20. Birnbaum, Michael H. & Chavez, Alfredo, 1997. "Tests of Theories of Decision Making: Violations of Branch Independence and Distribution Independence," Organizational Behavior and Human Decision Processes, Elsevier, vol. 71(2), pages 161-194, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:medema:v:17:y:1997:i:1:p:107-117. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.