Dealing with Bad Risk in Cost-Effectiveness Analysis: The Cost-Effectiveness Risk-Aversion Curve

Cost-effectiveness analysis with risk aversion.

This paper discusses why, in a medical context, the standard assumption of a risk-neutral social planner is inappropriate and develops a framework for conducting cost-effectiveness (CE) analysis when social planners are risk-averse. This framework demonstrates that if new medical interventions are variance increasing (decreasing), the risk-neutral approach will approve (reject) projects that sh...

Addressing risk preferences in cost-effectiveness analyses.

Cost-effectiveness analysis is a form of economic evaluation that compares that compares the costs and effectiveness of health interventions, where effectiveness is measured in a single scale. Despite the growth in the popularity of cost-effectiveness analysis, very few cost-effectiveness analyses adequately measure and account for uncertainty. In the health economics literature, two schools of...

Cost, effectiveness, and cost-effectiveness.

Incremental or marginal cost-effectiveness ratios are founded on a number of assumptions that weaken their suitability as a way to balance competing economic and clinical priorities. We therefore propose a more relevant and responsible way to gauge the impact of clinical management strategies based on “consumer protection” principles—explicit disclosure of (1) the total magnitude of expected be...

Cost-Effectiveness Analysis

CEA is a tool that has seen increasing use in recent decades as decision makers at all levels of health care provision seek to value alternative interventions (or programs, tests, or treatments). Although CEAs can be complex, and are often described using somewhat arcane terminology, the concept at the core of any CEA is fairly simple: to combine the net cost of a given intervention and its out...

Cost-Effectiveness Analysis