Contingent Valuation Studies and Health Policy
Matthew D. Adler
Duke University School of Law
February, 19 2010
Health Economics, Policy & Law, Vol. 5, p. 123, 2010
U of Penn Law School, Public Law Research Paper No. 10-10
This short comment argues that both cost-benefit analysis (CBA) and cost-effectiveness analysis (CEA) should be seen as imperfect tools for evaluating health policy. This is true, not only for extra-welfarists, but even for welfarists, since both CBA and CEA can deviate from the use of social welfare functions (SWF). A simple model is provided to illustrate the divergence between CBA, CEA, and the SWF approach. With this insight in mind, the comment considers the appropriate role of contingent-valuation studies.
Keywords: Cost-benefit analysis, CBA, cost-effectiveness analysis, CEA, willingness to pay, willingness to accept, extrawelfarism, welfarism, Kaldor-Hicks principle, social welfare functions, health policy choice, welfare theory
JEL Classification: I18, K32
Date posted: February 20, 2010
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