Rates and Probabilities in Economic Modelling: Transformation, Translation and Appropriate Application
Abstract
Economic modelling is increasingly being used to evaluate the cost effectiveness of health technologies. One of the requirements for good practice in modelling is appropriate application of rates and probabilities. In spite of previous descriptions of appropriate use of rates and probabilities, confusions persist beyond a simple understanding of their definitions. The objective of this article is to provide a concise guide to understanding the issues surrounding the use of rates and probabilities reported in the literature in economic models, and an understanding of when and how to transform them appropriately. The article begins by defining rates and probabilities and shows the essential difference between the two measures. Appropriate conversions between rates and probabilities are discussed, and simple examples are provided to illustrate the techniques and pitfalls. How the transformed rates and probabilities may be used in economic models is then described and some recommendations are suggested.Download Info
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Bibliographic Info
Article provided by Springer Healthcare | Adis in its journal PharmacoEconomics.
Volume (Year): 25 (2007)
Issue (Month): 1 ()
Pages: 3-6
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Handle: RePEc:wkh:phecon:v:25:y:2007:i:1:p:3-6
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Web page: http://pharmacoeconomics.adisonline.com/
For corrections or technical questions regarding this item, or to correct its listing, contact: (Dave Dustin).
Related research
Keywords: Modelling;Find related papers by JEL classification:
- C - Mathematical and Quantitative Methods
- D - Microeconomics
- I - Health, Education, and Welfare
- Z - Other Special Topics
- I1 - Health, Education, and Welfare - - Health
- I19 - Health, Education, and Welfare - - Health - - - Other
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
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