Intended for healthcare professionals

Education And Debate

Marginal costs and benefits

BMJ 1996; 312 doi: (Published 06 January 1996) Cite this as: BMJ 1996;312:35
  1. David J Torgerson, research fellowa,
  2. Anne Spencer, PhD studentb
  1. a National Primary Care Research and Development Centre, Centre for Health Economics, University of York, York YO1 5DD
  2. b Department of Economics, University of York
  1. Correspondence to: Mr Torgerson.
  • Accepted 11 October 1995

Decision makers are interested in measuring the costs and benefits of various interventions, and sometimes they are presented with the average costs and benefits of alternative interventions and asked to compare these. Usually a newer intervention is being compared with an existing one, and the most appropriate comparison is not of average costs (and benefits) but of the extra—or marginal—costs (and benefits) of the new intervention. Reanalysis of the costs effectiveness ratio of biochemical screening of all women for Down's syndrome compared with age based screening shows that the marginal cost effectiveness of biochemical screening is pounds sterling47786, compared with an average cost effectiveness of pounds sterling37591. It may sometimes be difficult or costly to calculate marginal costs and benefits, but this should be done whenever possible.

Some economic evaluations compare alternative health care interventions only by assessing differences in the average costs and benefits and express their results as average cost effectiveness ratios. This ratio is calculated by dividing the total cost of a health care intervention by the total benefits of such intervention.

This approach can be misleading as it describes inaccurately the different costs and benefits occurring with alternative health care interventions. A better method is to compare the extra costs and benefits between different health care interventions in …

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