Course: Concepts in Economic Evaluation

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Course Description

Describes how economic theory is linked to economic evaluation techniques like cost-benefit and cost-effectiveness analysis and to introduce students to many concepts that are specific to economic evaluation. Introduces students to the many varieties of economic evaluation to establish a common terminology. Discusses cost-benefit with a demonstration of how this type of evaluation is most clearly linked to economic theory. Explores other theories and concepts, including cost measurement, benefit valuation, and incremental decision-making. Finally, explores recommendations on performing economic evaluations that are made in the United States with a focus on how these are related to underlying economic theory and other concepts.

Course Objectives

By the end of this course students should be able to: (i) describe how economic theory is or is not related to the concepts underlying the valuation of costs and benefits in cost-benefit and cost-effectiveness analysis; (ii) apply a marginal decision making process to economic evaluation results; (iii) relate the US Panel on Cost-Effectiveness in Health and Medicine guidelines to the concepts underlying economic evaluation; (iv) Differentiate among cost of illness, cost minimization, cost-effectiveness, cost-utility, and cost-benefit studies; (v) Use supply and demand curves to interpret the costs and benefits associated with policy changes; (vi) assess willingness to pay for health improvements through a variety of methods including value of a statistical life, conjoint analysis, and contingent market valuation.; (vii) calculate theoretically motivated costs of programs and interventions incorporating inflation adjustments and discounting to present value; (viii) interpret cost-benefit results to make policy alternative recommendations; (ix) describe different study designs for cost-benefit studies



Drummond MF, O'Brien B, Stoddart GL, Torrance GW. Methods for the Economic Evaluation of Health Care Programmes, Second Edition . Oxford University Press. 1997.

Two reference texts are recommended for review

Boardman, Greenberg, Vining, and Weimer. 1996. Cost-Benefit Analysis: Concepts and Practice, Upper Saddle River, NJ: Prentice Hall

Sloan (ed.), Valuing Health Care: Costs, Benefits, and Effectiveness of Pharmaceuticals and Other Medical Technologies, Cambridge University Press, 1995.

Course Requirements

Lecture review (10%)

Problem Sets (30%)

Analytic Assignment (60%)