CEA is increasingly being used to evaluate resource allocation decisions in health care.
Most forms of CEA involve the maximisation of an effect variable for a given budget,
which typically involves funding all programmes with a cost-per-unit-outcome below a certain threshold level.
Economists have considered the extent to which this form of analysis is compatible with a standard welfare economic framework and, in particular, with CBA.
Under welfarist models, individuals are the best judges of their own welfare and individual WTP is taken to be the appropriate monetary valuation of any benefit.
CBA sums WTP over all those affected and compares this figure to net costs,
implementing only those programmes that increase net benefit (defined in monetary terms).
CBA is seen as the welfarist ‘gold standard’, whilst CEA can be argued to lack a theoretical foundation
CEA is increasingly being used to evaluate resource allocation decisions in health care.Most forms of CEA involve the maximisation of an effect variable for a given budget, which typically involves funding all programmes with a cost-per-unit-outcome below a certain threshold level. Economists have considered the extent to which this form of analysis is compatible with a standard welfare economic framework and, in particular, with CBA.Under welfarist models, individuals are the best judges of their own welfare and individual WTP is taken to be the appropriate monetary valuation of any benefit. CBA sums WTP over all those affected and compares this figure to net costs, implementing only those programmes that increase net benefit (defined in monetary terms). CBA is seen as the welfarist ‘gold standard’, whilst CEA can be argued to lack a theoretical foundation
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