CBA Flashcards
what does CBA stand for
cost benefit analysis
what is CBA
a method to compare the value in monetary terms of all resources consumed (costs) in providing an intervention against the value of the outcome (benefits) from that program or intervention
aka the yield of an investment
when to use CBA
when comparing interventions with DIFFERENT outcomes
limitation to CBA
does not evaluate the internal efficiency of a program
goal of CBA
conduct an economic evaluation for programs with a wide range of benefits
how are results discussed in CBA
in net monetary gain
attempts to value benefits, so outcomes are measured in $ and costs of the program are too
CBA makes what assumptions
-treatments/services can be separated from each other
-a choice can be made between available options
-outcomes of each intervention can be estimated
-these outcomes can be valued
-costs of each intervention can be estimated
-costs and benefits of each intervention can be weighed against each other
direct benefits in CBA
costs usually borne that are averted by implementation of the program
indirect benefits in CBA
potential increased earnings or productivity gains that would not be possible without the program
intangible benefits in CBA
psychological benefits of health, such as satisfaction with life or health
how are money values assigned to health outcomes in CBA
human capital approach (HCA) or willingness to pay (WTP)
what is the human capital approach (HCA)
places monetary weights on healthy time using market wage rates
what is willingness to pay (WTP)
the patient’s willingness to pay for trade-offs of time or money for relief from various probabilities of illness or adverse effects
values what you would pay for relief of a condition or prevention of an adverse effect (also called contingent valuation)
what is the benefit to cost ratio
total benefits / costs
a ratio of >1 means each dollar invested produces more than one dollar of benefits
what is net benefit/net present value (NPV)
benefits-costs
