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Discounting in economic evaluations: stepping forward towards optimal decision rules

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  • Hugh Gravelle
  • Werner Brouwer
  • Louis Niessen
  • Maarten Postma
  • Frans Rutten

Abstract

The National Institute for Clinical Excellence has recently changed its guidelines on discounting costs and effects in economic evaluations. In common with most other regulatory bodies it now requires that health effects should be discounted at the same rate as costs. We show that the guideline leads to sub‐optimal decisions because it fails to account for the changing value of health. NICE (and other regulatory bodies) should either use differential discounting or stipulate how the changing value of health should otherwise be dealt with. We also show how binding health service budget constraints should be incorporated in evaluations. Copyright © 2006 John Wiley & Sons, Ltd.

Suggested Citation

  • Hugh Gravelle & Werner Brouwer & Louis Niessen & Maarten Postma & Frans Rutten, 2007. "Discounting in economic evaluations: stepping forward towards optimal decision rules," Health Economics, John Wiley & Sons, Ltd., vol. 16(3), pages 307-317, March.
    • Handle: RePEc:wly:hlthec:v:16:y:2007:i:3:p:307-317
    DOI: 10.1002/hec.1168
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    References listed on IDEAS

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    1. Hugh Gravelle & Dave Smith, 2001. "Discounting for health effects in cost–benefit and cost‐effectiveness analysis," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 587-599, October.
    2. Ben A. Van Hout, 1998. "Discounting costs and effects: a reconsideration," Health Economics, John Wiley & Sons, Ltd., vol. 7(7), pages 581-594, November.
    3. Karl Claxton & Mark Sculpher & Anthony Culyer & Chris McCabe & Andrew Briggs & Ron Akehurst & Martin Buxton & John Brazier, 2006. "Discounting and cost‐effectiveness in NICE – stepping back to sort out a confusion," Health Economics, John Wiley & Sons, Ltd., vol. 15(1), pages 1-4, January.
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