A Note on Confidence Intervals in Cost-Effectiveness Analysis
AbstractHow to obtain confidence intervals for cost-effectiveness ratios is complicated by the statistical problems to obtain a confidence interval for a ratio of random variables. Different approaches have been suggested in the literature, but no consensus has been reached. In this note we propose an alternative simple solution to this problem. By multiplying the effectiveness units by the price per effectiveness unit, both costs and benefits can be expressed in monetary terms and standard statistical techniques can be used to estimate a confidence interval for net benefits. This avoids the ratio estimation problem and explicitly recognizes that the price per effectiveness unit has to be known to provide cost-effectibeness analysis with a useful decision rule.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 181.
Length: 8 pages
Date of creation: 13 Aug 1997
Date of revision:
Publication status: Published in International Journal of Technology Assessment in Health Care, 1998, pages 467-471.
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Confidence intervals; Cost-effectiveness ratios; Cost-effectiveness analysis; Economic evaluation;
Find related papers by JEL classification:
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
- I10 - Health, Education, and Welfare - - Health - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-11-05 (All new papers)
- NEP-HEA-1998-11-05 (Health Economics)
- NEP-PUB-1998-11-05 (Public Finance)
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