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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. 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.
    2. 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.
    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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