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Department of Economics, Copenhagen Business School Working Paper Series, Department of Economics, Copenhagen Business School

No 09-1999:
PRODUCTION GAINS IN COST-EFFECTIVE- NESS ANALYSES - A WELFARE-THEORETI- CAL APPROACH

Bodil O. Hansen and Hans keiding

Abstract: In the literature on cost-effectiveness analyses, there has recently been considerable debate on

the way of measuring the production gain caused by a new treatment as well as its proper evaluation.

In this paper, we propose a general framework for the discussion of such questions in the form of a

general equilibrium model with separate health variables. It is shown how the standard methods of

cost-effectiveness and cost-utility analysis are derived from basic assumptions. Also, the question

of whether to choose the human capital or the frictional method in evaluating production gains can

be given an answer in this model.

Keywords: Cost-effectiveness analysis; Production gain; General equilibrium model; Health variables; Cost-utility analysis; (follow links to similar papers)

JEL-Codes: D61; (follow links to similar papers)

17 pages, November 1, 1999

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