The Trade-Off between Equity and Efficiency in Population Health Gain: Making it Real

Social science & medicine (1982), 212, 136-144. doi:10.1016/j.socscimed.2018.07.005

The University of Auckland Business School Research Paper Series

Posted: 28 Jan 2022

See all articles by Peter Sandiford

Peter Sandiford

The University of Auckland

David Vivas-Consuelo

Universitat Politécnica de València

Paul Rouse

University of Auckland Business School

Dale Bramley

Corporate Office, Waitemata District Health Board

Date Written: 2018

Abstract

Two fundamental goals of health systems are to maximise overall population health gain (referred to as efficiency) and to minimise unfair health inequalities (equity). Often there is a trade-off in maximising efficiency vis a vis equity and the relative weight given to one goal over the other is acknowledged to be essentially a value judgement. Health systems necessarily make those value judgements but in making them would benefit from relevant and accurate opportunity cost information. Unfortunately the development of practical tools to measure equity-efficiency trade-offs has lagged theoretical advances in this area. We address this gap by presenting a practical technique to reveal opportunity costs of equity (and efficiency) gains in decentralised population-based health systems, applying stochastic data envelopment analysis to ethnic-specific life expectancy (LE) changes for 20 New Zealand (NZ) District Health Boards for the inter-census period 2006–2013, thereby deriving a notional health frontier from 10,000 Monte Carlo simulations. Four different ways to increase health equity emerge. These show that a trade-off between equity and efficiency does not always exist. In particular, improving both productive efficiency and allocative efficiency (up to its maximum) can also yield gains in equity through reductions in LE inequalities. However, in NZ's case, the opportunity cost (in sacrificed European life-years) of achieving gains in equity beyond the point of maximum productive and allocative efficiency is relatively high, even for quite small reductions in the LE gap between Māori and European populations. This high opportunity cost may explain why, despite governments' strong rhetorical commitment to equity, NZ's health gains have not strayed far from the path of maximising allocative efficiency. Nevertheless, this opportunity cost could be reduced significantly by measures which shift the health frontier outward, highlighting the importance of technical and organisational innovation as potential drivers of greater equity in health outcomes. Full paper available at https://doi.org/10.1016/j.socscimed.2018.07.005

Keywords: New Zealand, Equity, Efficiency, Data envelopment analysis, Māori, Health frontier

Suggested Citation

Sandiford, Peter and Vivas-Consuelo, David and Rouse, Paul and Bramley, Dale, The Trade-Off between Equity and Efficiency in Population Health Gain: Making it Real (2018). Social science & medicine (1982), 212, 136-144. doi:10.1016/j.socscimed.2018.07.005, The University of Auckland Business School Research Paper Series, Available at SSRN: https://ssrn.com/abstract=4018632

Peter Sandiford (Contact Author)

The University of Auckland ( email )

Auckland
New Zealand

David Vivas-Consuelo

Universitat Politécnica de València ( email )

Camino de Vera, s/n
Valencia, Valencia 46022
Spain

Paul Rouse

University of Auckland Business School ( email )

Private Bag 92019
Auckland
New Zealand
+64 9 373 7599 (Phone)
+64 9 373 7406 (Fax)

Dale Bramley

Corporate Office, Waitemata District Health Board ( email )

Level 1, 15 Shea Terrace, Takapuna
Auckland, 0740
New Zealand

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
67
PlumX Metrics