Current methods of cost effectiveness analysis implicitly assume zero spillovers among social ties. This can underestimate the benefits of health interventions and misallocate resources toward interventions with lower comprehensive effects. We discuss the implications of social spillovers for program evaluation and document the first evidence of causal spillovers of health behaviors between spouses by leveraging experimental data from the Lung Health Study (smoking) and COMBINE Study (drinking). We find large decreases in spousal substance use from treatments with a therapy component, which reduces the incremental cost effectiveness ratios of some treatments by 12 to 18 percent.
Keywords: H51 Government Expenditures and Health; I12 Health Behavior; I18 Government Policy • Regulation • Public Health.