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, 70, 102287
[Online ahead of print]

A Welfare-Theoretic Model Consistent With the Practice of Cost-Effectiveness Analysis and Its Implications

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A Welfare-Theoretic Model Consistent With the Practice of Cost-Effectiveness Analysis and Its Implications

Anirban Basu. J Health Econ.

Abstract

I look at three debates in the health economics literature in the context of cost-effectiveness analysis (CEA): 1) inclusion of future costs, 2) discounting, and 3) consistency with a welfare-economic perspective. These debates thus far have been studied in isolation leading to confusion and lingering questions. I look at these three debates holistically and present a welfare theoretic model that is consistent with the practice of CEA and can help inform all of these three debates. It shows rationales for the recommendations of the Second Panel and clarifies some nuanced implications for the practice of CEA when taking a societal perspective in the context of distributional CEA and multi-sectorial budgets.

Keywords: Cost-effectiveness analysis; Discounting; Distributive CEA; Future costs; Societal perspective; Utility; Welfare economics.

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