Addressing risk preferences in cost-effectiveness analyses.
Cost-effectiveness analysis is a form of economic evaluation that compares that compares the costs and effectiveness of health interventions, where effectiveness is measured in a single scale. Despite the growth in the popularity of cost-effectiveness analysis, very few cost-effectiveness analyses adequately measure and account for uncertainty. In the health economics literature, two schools of thought are emerging. The first takes a statistical approach to uncertainty by focusing on the likelihood that a decision making error will be made. The second approach applies and develops economic theories of risk preference that consider the welfare implications for a patient when they are presented with interventions that have uncertain health outcomes. Cost-effectiveness analyses need to account for risk preferences if they claim to be increasing patient welfare.
Zivin
Joshua Graff
JG
Department of Health Policy and Management, Mailman School of Public Health, International Center for Health Outcomes and Innovation Research, Columbia University, New York, NY, USA.
Bridges
John F
JF
D003362:Cost-Benefit Analysis / Q000379:methods; D006292:Health Priorities; D006801:Humans; D016013:Likelihood Functions; D017060:Patient Satisfaction / Q000191:economics*; D018570:Risk Assessment / Q000191:economics*; D012309:Risk-Taking; D016896:Treatment Outcome; D035501:Uncertainty; D014481:United States; D026712:Value of Life / Q000191:economics*