Cost-effectiveness as a criterion for public spending on health: a reply to William Jack's 'second opinion'

Cost-effectiveness analysis (CEA) deals with the principal health effect that enters any valuation of benefits, without the difficulty of moneterizing health gains or treating differences among individuals in how they value health improvements. Much of Jack's criticism of CEA is based on misunderstanding of how it should be used. It is often an important criterion for determining how to spend public money on health care, but never the only one. Reasoning from the way individuals would choose to spend their own money among different desirable effects, where CEA is not applicable or people do not want the most cost-effective interventions, does not correspond to the problems faced in allocating resources across individuals for the same purpose.