Summary
| Cost-Benefit Analysis | Cost-Effectiveness Analysis |
| Compares cost of intervention with benefit incurred where benefit is measured in monetary units | Compares cost per consequence (outcome) of two or more interventions where outcomes are measured by ‘natural’ units |
| Focuses on monetary outcomes | Focuses on non-monetary outcomes |
| Net Benefit = Benefits- Costs | Cost-Effectiveness Ratio (CER) = Cost of intervention/ Effect of intervention |
| Outcomes include: net monetary benefit | Outcomes include: Years of life saved, number of deaths prevented, etc. |
| The intervention providing maximum net benefit should be chosen | The intervention with higher natural units (life-years gained, etc.) should be chosen |
| Results are presented in terms of ratio of benefit-to-cost, and return on investment | Results are presented in terms of incremental cost per unit of effect for interventions |
| Benefits obtained from CBA may be direct, indirect, or intangible | CEA focuses only on health outcomes, neglecting non-health outcomes |
| The outcomes are already known | Cost-effectiveness depends on long-term outcomes which are unknown |
| Suitable for evaluation of industrial projects, as monetary value can be easily calculated | More suitable for service-oriented sectors |
| Data collection for costs can be complex | Doesn’t make comparisons between interventions producing different outcomes |
Useful Links:
Links to relevant articles:
http://www.bandolier.org.uk/painres/download/whatis/What_is_health_econ.pdf
Links to relevant sites:
https://www.cdc.gov/policy/polaris/economics/cost-effectiveness.html
https://www.nlm.nih.gov/nichsr/edu/healthecon/04_he_06.html
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