Why not real economics?

Abstract

In his reflections in this journal on a long and fruitful career, George Torrance observed: ‘‘I have always been struck by the criticism that health economics, specifically health economic evaluation, is the only application of economics that does not use the discipline of economics. If it did, it would use cost-benefit analysis, not cost-effectiveness or cost-utility analysis, and it would measure health outcomes using a monetary amount, on the basis of techniques such as willingness to pay...’’[1]<br><br>Why then, if cost-benefit analysis (CBA) is a standard tool of analysis in all other areas of applied economics, is it rarely used in health technology<br>assessment (HTA)? Gold et al.[2] offer the following justification for using cost-effectiveness analysis (CEA):<br>‘‘CBA presumes to put a dollar figure on the value of human life and uses controversial methods to do so. y [M]onetizing the price of<br>life in these ways introduces ethical concerns that are avoided by CEA. ... Cost-benefit analysis’s primary valuation method is willingness<br>to pay, an approach whose difficulty lies in its intrinsic favoring of the programs and diseases of the affluent over those of the<br>poor.’’