Estimating treatment cost functions for progressive diseases: a multiproduct approach with an application to breast...

Using the theory of multiproduct cost functions, a treatment cost function is derived for diseases which progress through a number of stages. The output classes are conceived as the stages at detection of the disease, with the unit of output within each class being the treated case. The derivation clarifies the assumptions underlying various specific functional forms for the treatment cost function. An empirical application to the treatment of breast cancer is provided, producing evidence on an important issue in the economics of screening programs, viz. whether detection of breast cancer at an earlier stage results in treatment cost savings.