The cost of life expectancy and the implicit social valuation of life

A new method of estimating the economic value of life is proposed. Using cross-country data, an equation is estimated to explain life expectancy as a function of real consumption of goods and services. The associated cost function for life expectancy in terms of the prices of specific goods and services is used to estimate the cost of a reduction in age-specific mortality rates sufficient to save the life of one person. The cost of saving a life in OECD countries is as much as 1000 times that in the poorest countries. Ethical implications are discussed.

Cost-effectiveness analysis of humanitarian relief interventions: visceral leishmaniasis treatment in the Sudan

Spending by aid agencies on emergencies has quadrupled over the last decade, to over US$ 6 billion. To date, cost-effectiveness has seldom been considered in the prioritization and evaluation of emergency interventions. The sheer volume of resources spent on humanitarian aid and the chronicity of many humanitarian interventions call for more attention to be paid to the issue of 'value for money'. In this paper we present data from a major humanitarian crisis, an epidemic of visceral leishmaniasis (VL) in war-torn Sudan. The special circumstances provided us, in retrospect, with unusually accurate data on excess mortality, costs of the intervention and its effects, thus allowing us to express cost-effectiveness as the cost per Disability Adjusted Life Year (DALY) averted. The cost-effectiveness ratio, of US$ 18.40 per DALY (uncertainty range between US$ 13.53 and US$ 27.63), places the treatment of VL in Sudan among health interventions considered 'very flood value for money' (interventions of less than US$ 25 per DALY). We discuss the usefulness of this analysis to the internal management of the VL programme, the procurement of funds for the programme, and more generally, to priority setting in humanitarian relief interventions. We feel that in evaluations of emergency interventions attempts could be made more often to perform cost-effectiveness analyses, including the use of DALYs, provided that the outcomes of these analyses are seen in the broad context of the emergency situation and its consequences on the affected population. This paper provides a first contribution to what is hoped to become an international database of cost-effectiveness studies of health outcome such as the DALY.

Effects of data characteristics on the results of reserve selection algorithms

We tested the effects of four data characteristics on the results of reserve selection algorithms. The data characteristics were nestedness of features (land types in this case), rarity of features, size variation of sites (potential reserves) and size of data sets (numbers of sites and features). We manipulated data sets to produce three levels, with replication, of each of these data characteristics while holding the other three characteristics constant. We then used an optimizing algorithm and three heuristic algorithms to select sites to solve several reservation problems. We measured efficiency as the number or total area of selected sites, indicating the relative cost of a reserve system. Higher nestedness increased the efficiency of all algorithms (reduced the total cost of new reserves). Higher rarity reduced the efficiency of all algorithms (increased the total cost of new reserves). More variation in site size increased the efficiency of all algorithms expressed in terms of total area of selected sites. We measured the suboptimality of heuristic algorithms as the percentage increase of their results over optimal (minimum possible) results. Suboptimality is a measure of the reliability of heuristics as indicative costing analyses. Higher rarity reduced the suboptimality of heuristics (increased their reliability) and there is some evidence that more size variation did the same for the total area of selected sites. We discuss the implications of these results for the use of reserve selection algorithms as indicative and real-world planning tools.

Life-cycle preferences over consumption and health: when is cost-effectiveness analysis equivalent to cost-benefit analysis?

This paper studies life-cycle preferences over consumption and health status. We show that cost-effectiveness analysis is consistent with cost-benefit analysis if the Lifetime utility function is additive over time, multiplicative in the utility of consumption and the utility of health status, and if the utility of consumption is constant over time. We derive the conditions under which the lifetime utility function takes this form, both under expected utility theory and under rank-dependent utility theory, which is currently the most important nonexpected utility theory. If cost-effectiveness analysis is consistent with cost-benefit analysis, it is possible to derive tractable expressions for the willingness to pay for quality-adjusted life-years (QALYs). The willingness to pay for QALYs depends on wealth, remaining life expectancy, health status, and the possibilities for intertemporal substitution of consumption. (C) 1999 Elsevier Science B.V. All rights reserved.

Estimating the cost of contact for non-resident parents: A budget standards approach

Most Western countries have, for some time, provided income support and/or taxation relief to parents with children in their care. The significant amount of research into the costs of children to couple and sole parent households has been important in assessing and developing family support policies. Changing societal expectations about the level of involvement of fathers in child rearing activities has highlighted the need to understand the costs facing usually male non-resident parents in having contact with their children. The budget standards methodology is used in this paper to estimate the costs for non-resident parents exercising regular contact with their children. Costs of contact are found to be high. For contact with one child for 20 per cent of the year, costs of contact represent about 40 per cent of the costs of that same child in an intact couple household with a medium income and more than half of the costs of that child in a household with low income. Household infrastructure and transportation is the reason for high costs. One implication of this finding is that the total cost of children substantially increases when parents separate. The article discusses some policy implications of these findings. This research is of relevance to social security, taxation, family law and child support policies and administration.

Assessing cost-effectiveness in mental health: family interventions for schizophrenia and related conditions

Objective: Existing evidence suggests that family interventions can be effective in reducing relapse rates in schizophrenia and related conditions. Despite this, such interventions are not routinely delivered in Australian mental health services. The objective of the current study is to investigate the incremental cost-effectiveness ratios (ICERs) of introducing three types of family interventions, namely: behavioural family management (BFM); behavioural intervention for families (BIF); and multiple family groups (MFG) into current mental health services in Australia. Method: The ICER of each of the family interventions is assessed from a health sector perspective, including the government, persons with schizophrenia and their families/carers using a standardized methodology. A two-stage approach is taken to the assessment of benefit. The first stage involves a quantitative analysis based on disability-adjusted life years (DALYs) averted. The second stage involves application of 'second filter' criteria (including equity, strength of evidence, feasibility and acceptability to stakeholders) to results. The robustness of results is tested using multivariate probabilistic sensitivity analysis. Results: The most cost-effective intervention, in order of magnitude, is BIF (A$8000 per DALY averted), followed by MFG (A$21 000 per DALY averted) and lastly BFM (A$28 000 per DALY averted). The inclusion of time costs makes BFM more cost-effective than MFG. Variation of discount rate has no effect on conclusions. Conclusions: All three interventions are considered 'value-for-money' within an Australian context. This conclusion needs to be tempered against the methodological challenge of converting clinical outcomes into a generic economic outcome measure (DALY). Issues surrounding the feasibility of routinely implementing such interventions need to be addressed.

Assessing cost-effectiveness - Mental health: introduction to the study and methods

Objective: The Assessing Cost-Effectiveness - Mental Health (ACE-MH) study aims to assess from a health sector perspective, whether there are options for change that could improve the effectiveness and efficiency of Australia's current mental health services by directing available resources toward 'best practice' cost-effective services. Method: The use of standardized evaluation methods addresses the reservations expressed by many economists about the simplistic use of League Tables based on economic studies confounded by differences in methods, context and setting. The cost-effectiveness ratio for each intervention is calculated using economic and epidemiological data. This includes systematic reviews and randomised controlled trials for efficacy, the Australian Surveys of Mental Health and Wellbeing for current practice and a combination of trials and longitudinal studies for adherence. The cost-effectiveness ratios are presented as cost (A$) per disability-adjusted life year (DALY) saved with a 95% uncertainty interval based on Monte Carlo simulation modelling. An assessment of interventions on 'second filter' criteria ('equity', 'strength of evidence', 'feasibility' and 'acceptability to stakeholders') allows broader concepts of 'benefit' to be taken into account, as well as factors that might influence policy judgements in addition to cost-effectiveness ratios. Conclusions: The main limitation of the study is in the translation of the effect size from trials into a change in the DALY disability weight, which required the use of newly developed methods. While comparisons within disorders are valid, comparisons across disorders should be made with caution. A series of articles is planned to present the results.