Cost effectiveness analysis

Cost-effectiveness analysis (CEA) is a form of economic evaluation concerned with efficiency: that is, with achieving the most for the resources ( “value for money”). For example, imagine that you have billions of dollars to allocate to global health and have to decide how to spend it. Or, you are a minister of health who wants to rationalize the use of your budget. Or imagine you are the head of an agency mandated to improve human health, and you need to know what strategies to recommend. The primary aim of this chapter is to show that, in each of these cases, you ought to know something about CEA if you want to achieve your objectives. Fortunately, a number of excellent standard accounts are available (Jamison, 2009; Sculpher et al., 2017). So rather than retrace well-trodden ground, this chapter offers a complementary approach intended to respond to the needs of non-economists. It also offers a novel perspective on CEA that should be of interest to specialists. A related aim of the chapter is to explain why – in spite of its relevance – CEA remains underused for problems like those mentioned above, and misused in many cases where it is applied. We attempt to show therefore both why CEA is often appealed to and why its basic principles remain opaque.