Scandinavian Working Papers in Economics
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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 181:
A Note on Confidence Intervals in Cost-Effectiveness Analysis

Magnus Tambour (), Niklas Zethraeus () and Magnus Johannesson ()

Abstract: How to obtain confidence intervals for cost-effectiveness ratios is complicated by the statistical problems to obtain a confidence interval for a ratio of random variables. Different approaches have been suggested in the literature, but no consensus has been reached. In this note we propose an alternative simple solution to this problem. By multiplying the effectiveness units by the price per effectiveness unit, both costs and benefits can be expressed in monetary terms and standard statistical techniques can be used to estimate a confidence interval for net benefits. This avoids the ratio estimation problem and explicitly recognizes that the price per effectiveness unit has to be known to provide cost-effectibeness analysis with a useful decision rule.

Keywords: Confidence intervals; Cost-effectiveness ratios; Cost-effectiveness analysis; Economic evaluation; (follow links to similar papers)

JEL-Codes: D61; D81; H43; I10; (follow links to similar papers)

8 pages, August 13, 1997

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This paper is published as:
Tambour, Magnus, Niklas Zethraeus and Magnus Johannesson, (1998), 'A Note on Confidence Intervals in Cost-Effectiveness Analysis', International Journal of Technology Assessment in Health Care, Vol. 14, No. 3, pages 467-471

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