Intended for healthcare professionals

Education And Debate

Is economic evaluation in touch with society's health values?

BMJ 2004; 329 doi: (Published 18 November 2004) Cite this as: BMJ 2004;329:1233
  1. Joanna Coast (, senior lecturer in health economics1
  1. 1 Department of Social Medicine, University of Bristol, Bristol BS8 2PR
  • Accepted 16 September 2004

Health funding is increasingly based on the results of economic evaluation. But current methods fail to consider all society's health objectives and are too complex for policy makers to use


The technical expertise required for conducting economic evaluations and interpreting their results continues to increase. Current best practice includes cost effectiveness acceptability curves, net-benefit frameworks, and probabilistic modelling.1 These methods are valuable, but by generating a pseudoscientific aura around economic evaluation, they camouflage critical weaknesses in current techniques. In this article, I describe the evolution of economic evaluation in health care (see box for terminology), explore the assumptions underlying current approaches and the resulting concerns, and suggest an alternative approach.

Why do we need economic evaluation?

People who are not economists often find it difficult to understand the importance of the theory behind the comparison of costs and effects. After all, if we compare two washing machines of equal cost and one works for 10 years and the other for 15, it is clear that the machine lasting 15 years is a better buy. The need for theory arises, however, because interpersonal rather than within individual comparisons are involved; in health care the question is not, generally, whether I choose the 10 or 15 year washing machine but whether I get the 10 year washing machine or you get the one lasting 15 years.

Welfare economics

Economic evaluation stems from Paretian welfare economics. It incorporates the principles that individuals are the best judges of their own wellbeing and that, if one person can be made better off without another being made worse off, there is global improvement in welfare. This value judgment is uncontroversial but, in policy terms, practically useless: few policies benefit some individuals without affecting others.

Terminology used in economic evaluation

Cost benefit analysis—Costs valued in money and compared with outcomes also valued in money

Cost effectiveness analysis—Costs …

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