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The Science of Making Better Decisions about Health: Cost-Effectiveness and Cost-Benefit Analysis

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  • Louise Russell

    (Rutgers University)

Abstract

Despite spending far more on medical care, Americans live shorter lives than the citizens of other high-income countries. The situation has been getting worse for at least three decades. This paper describes the main scientific methods for guiding the allocation of resources to health – cost-effectiveness analysis (CEA) and cost-benefit analysis (CBA), sketches their methodological progress over the last several decades, and presents examples of how medical practice in other high-income countries, where people live longer, follows the priorities indicated by cost-effectiveness analysis. CEA and CBA support democratic decision-making processes, which have themselves benefited from scientific inquiry; these are touched on at the end of the paper.

Suggested Citation

  • Louise Russell, 2014. "The Science of Making Better Decisions about Health: Cost-Effectiveness and Cost-Benefit Analysis," Departmental Working Papers 201406, Rutgers University, Department of Economics.
    • Handle: RePEc:rut:rutres:201406
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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/2014-06.pdf
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    References listed on IDEAS

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    1. Lisa A. Robinson & James K. Hammitt, 2013. "Behavioral economics and the conduct of benefit–cost analysis: towards principles and standards," Chapters, in: Scott O. Farrow & Richard Zerbe, Jr. (ed.), Principles and Standards for Benefit–Cost Analysis, chapter 10, pages 317-363, Edward Elgar Publishing.
    2. Jones-Lee, M W & Hammerton, M & Philips, P R, 1985. "The Value of Safety: Results of a National Sample Survey," Economic Journal, Royal Economic Society, vol. 95(377), pages 49-72, March.
    3. E. Ostrom, 2010. "A Behavioral Approach to the Rational Choice Theory of Collective Action Presidential Address, American political Science Association, 1997," Public administration issues, Higher School of Economics, issue 1, pages 5-52.
    4. Lisa A. Robinson, 2007. "Policy Monitor How US Government Agencies Value Mortality Risk Reductions," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 1(2), pages 283-299, Summer.
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    Cited by:

    1. Daisuke Goto & Ya-Chen Tina Shih & Pascal Lecomte & Melvin Olson & Chukwukadibia Udeze & Yujin Park & C. Daniel Mullins, 2017. "Regression-Based Approaches to Patient-Centered Cost-Effectiveness Analysis," PharmacoEconomics, Springer, vol. 35(7), pages 685-695, July.

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    More about this item

    Keywords

    cost-effectiveness analysis; cost-benefit analysis;

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • I1 - Health, Education, and Welfare - - Health
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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