Background
In 2013‐2014, the Bill and Melinda Gates Foundation commissioned the development of a reference case for economic evaluation of health‐related interventions, particularly in low‐ and middle‐income countries. The resulting recommendations include 11 important principles, each of which is supported by methodological specifications and reporting standards. While many components of the reference case are applicable to any type of economic evaluation, the primary focus is on cost‐effectiveness analysis. In late 2016, the Gates Foundation funded the current project to expand the reference case to address benefit‐cost analysis. Work on this project is now complete; the results are posted on the methods papers and case studies and guidelines pages of this site.
What is benefit‐cost analysis?
Both cost‐effectiveness analysis and benefit‐cost analysis provide information on the costs and consequences of investments. The primary difference is that in benefit‐cost analysis, all outcomes are measured in monetary units. In contrast, in cost‐effectiveness analysis the health benefits are measured in a nonmonetary units such as disability‐adjusted life years (DALYs) averted, while costs and other effects are measured in monetary units. Which type of economic analysis is most appropriate depends on the nature of the problem to be addressed and the needs of the decision‐makers. In either case, the economic analysis must be supplemented by information on other important considerations, such as non‐quantifiable impacts, technical feasibility, legal constraints, and budgetary resources.
By using money as a common metric, benefit‐cost analysis in principle allows the simultaneous, integrated consideration of multiple consequences, including both health and non‐health impacts. Money is not important per se; it is simply a convenient way to measure the trade‐offs individuals and societies are willing to make. If an individual chooses to purchase a particular good or service, he or she presumably values that good or service at least as much as the other things he or she could have used that money to buy. More generally, if a country or other funder chooses to spend more on one initiative, it will have fewer resources available to devote to other purposes – including other initiatives that address the same or similar problems.
Why is this project needed?
Because of data gaps and inconsistencies, uncertainty about likely consequences, and other factors, the results of any analysis will depend in part on the methods and assumptions used. However, differences in the methods and assumptions can lead to widely varying conclusions regarding the impacts of particular programs and policies. Consistent approaches are needed to allow comparison of results across studies. To be useful for evidence‐based decision‐making, these approaches must be firmly anchored in high quality research and clearly communicated, so that users can have confidence in the results.
What are the project goals?
The overall goal of this project is to build on the existing reference case to encourage the conduct of high quality, comparable benefit‐cost analyses of initiatives designed to improve the health and well‐being of low‐ and middle‐income populations. Ultimately, this project will aid analysts, decision‐makers, and other stakeholders in distinguishing the types of problems and the types of decision‐making contexts where benefit‐cost analysis is likely to be most useful; in understanding the implications of different methodological choices; in implementing evidence-based approaches that promote the comparability of the analyses; and in clearly communicating the results and their implications. It will also identify priorities for future work, including dissemination and technical assistance as well as new primary research.