ECONOM

IC
evaluation
analysis
 ECONOMIC EVALUATION

● Is a method pf providing decision-makers with information about the opportunity cost of the decisions that could be
made, where opportunity cost is the benefit we would have obtained had the resources used to provide one treatment
been used to provide another instead, or more strictly we would have obtained had we used the resources for their next
best alternative use. Economic evaluation is the comparative analysis of alternative courses of action in terms of both
their costs (resources use) and effectiveness (health effects).
● is the process of systematic identification, measurement and valuation of the inputs and outcomes of two alternative
activities, and the subsequent comparative analysis of these. The purpose of economic evaluation is to identify the best
course of action, based on the evidence available. It is most commonly employed in the context of health economics and 
health technology assessment.
● Is the process of driving economic principles from relevant economic facts.
● Economic Evaluation is the comparative analysis/evaluation of two or more interventions in terms of their cost and
consequences
● It is the evaluation or assessment of different programs based on their input given Vs results/outcomes generated
● Economic evaluation is also known as economic appraisal
● The most fundamental/basic concept of these economic evaluations are that both the costs and benefits of all the
available options are taken into account
● However, the cost and benefit vary according to the viewpoint adopted in the analysis
Importance of economic evaluations

• At present, resources are being limited while on the other

hand, costs of programs are rising in addition with more
innovative and technological advancements. Thus, economic
evaluation has become a necessary and a dire need

• Economic evaluation also helps to prioritize the programs and

make the best decision for optimal resource allocation

• Economic evaluations are important tools for assessing

economic feasibility and efficiency of health interventions
 There are major 4 different types of economic evaluation methods.
01
TYPES/MET COST
HODS OF BENEFIT 03
ECONOMIC ANALYSIS COST UTILITY
EVALUATIO (CBA)
02 04
ANALYSIS (cua)
N COST COST
EFFECTIVE MINIMIZATIO
ANALYSIS N ANALYSIS
(cea) (cma)
Each of this analysis involves systematic identification and measurement of the
costs and consequences of the interventions
TYPES/METHODS OF
ECONOMIC
EVALUATION
1. COST BENEFIT
ANALYSIS (cba)
• In this method of evaluation, cost of
the intervention is compared with the
benefit incurred from the intervention
• Both costs and benefit is measured in
terms of monetary units
• The net benefit is measured as: Net
benefit= Benefit – Costs
• Therefore, if the benefit exceeds the
cost incurred during the intervention,
the intervention should be continued
2. COST MINIMIZATION
ANALYSIS (cMa)
• In this method of analysis, costs of two
or more interventions achieving
identical outcome is measured. The
intervention incurring the lowest cost is
then chosen
• It should be strictly noted that the
intervention can only be conducted
when the outcomes of the comparing
interventions are same
1. COST EFFECTIVE
ANALYSIS (cEa)
• In this method of analysis, cost is measured against the
effectiveness of the intervention (effectiveness is the
final consequence)
• The consequences of the comparing interventions may
vary here (different than cost minimization analysis
where the outcomes of interventions were identical).
However, these consequences can be expressed in
common natural units like life years gained, saved
years of life etc or improvement in functional status
(units of cholesterol, blood pressure etc.)
• The limitation of this analysis is that it is difficult to
compare the interventions with differing natural
effects. Eg: interventions which are focused on looking
at life years saved cannot be compared with other
interventions which are focusing on improving the
physical functioning
1. COST UTILITY
ANALYSIS (cUa)
• In this method of analysis, cost incurred in
the intervention is measured against the
“utility” related to health
• Utility refers to the Quality Adjusted Life
Years (QALY), Disability Adjusted Life
Years (DALY)
• This method is specially used when there are
multiple objectives of the program and when
both quality of life and quantity of life are
important to know
• It is also used to make policy level decisions

Positive Economic Analysis
The analysis of facts and data to
establish the scientific generalizations
about economic behavior.
“Statements about how the world
actually operates – what is” e.g.
what is the unemployment rate in ab
economy, what is country’s GDP.
TYPES OF ECONOMIC
ANALYSIS
Normative Economic Analysis
The part of economics involving value
judgement about what the country
should be like, focused on which
economic goals and policies should be
implemented. “Statement about how
the world should be”. E.g. How
unemployment rate could be
reduced or How can a country raise
its GDP.
strengths of different economic evaluations along
with other important aspects are mentioned below:
 on the basis of measurement of consequences, economic
evaluations can be remembered as:

   Type of study  Measurement of consequences

Cost minimization analysis No measurement of consequences as the

consequences/ outcomes are same

Cost effective analysis Outcomes are measured in natural units. Eg: life
years gained, life years saved etc

Cost utility analysis Utility of the intervention is measured Eg: DALY,

QALY

Cost benefit analysis Consequences are measured in monetary terms

 REFERENCES

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