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Health Econ. 2013 Dec;22(12):1405-16. doi: 10.1002/hec.2889. Epub 2013 Feb 26.

Axiomatic foundations for cost-effectiveness analysis.

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1
Department of Global Health and Population, Harvard School of Public Health, Boston, USA.

Abstract

We show that individual utilities can be measured in units of healthy life years. Social preferences over these life metric utilities are assumed to satisfy the Pareto principle, anonymity, and invariance to a change in origin. These axioms generate a utilitarian social welfare function implying the use of cost-effectiveness analysis in ordering health projects, based on maximizing the healthy years equivalents gained from a fixed health budget. For projects outside the health sector, our cost-effectiveness axioms imply a form of cost-benefit analysis where both costs and benefits are measured in equivalent healthy life years.

KEYWORDS:

cost-benefit; cost-effectiveness; project appraisal

PMID:
23440955
DOI:
10.1002/hec.2889
[Indexed for MEDLINE]
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