Cost-effectiveness analysis when the WTA is greater than the WTP

Stat Med. 2001 Nov 15;20(21):3251-9. doi: 10.1002/sim.1018.


The incremental cost effectiveness ratio has long been the standard parameter of interest in the assessment of the cost-effectiveness of a new treatment. However, due to concerns with interpretability and statistical inference, authors have suggested using the willingness-to-pay for a unit of health benefit to define the incremental net benefit as an alternative. The incremental net benefit has a more consistent interpretation and is amenable to routine statistical procedures. These procedures rely on the fact that the willingness-to-accept compensation for a loss of a unit of health benefit (at some cost saving) is the same as the willingness-to-pay for it. Theoretical and empirical evidence suggest, however, that in health care the willingness-to-accept is about twice as much as the willingness-to-pay. We use Bayesian methods to provide a statistical procedure for the cost-effectiveness comparison of two arms of a randomized clinical trial that allows the willingness-to-pay and the willingness-to-accept to have different values. An example is provided.

MeSH terms

  • Bayes Theorem
  • Biometry*
  • Clinical Trials as Topic / economics*
  • Clinical Trials as Topic / statistics & numerical data*
  • Cost-Benefit Analysis*
  • Humans
  • Male
  • Palliative Care / economics
  • Prostatic Neoplasms / drug therapy
  • Prostatic Neoplasms / economics