Is it really possible to build a bridge between cost-benefit analysis and cost-effectiveness analysis?

Area of Science:

• Health Economics
• Welfare Economics
• Decision Analysis

Background:

• Cost-benefit analysis (CBA) aligns with welfare economics but faces practical challenges.
• Cost-effectiveness analysis (CEA), using non-monetary health benefits, is often preferred in healthcare resource allocation.
• Previous research attempted to bridge CBA and CEA within a welfare economic framework.

Purpose of the Study:

• To investigate the theoretical possibility of linking CBA and CEA in economic evaluations.
• To develop and present an impossibility theorem regarding the integration of CBA and CEA.
• To assess the welfare economic validity of assumptions required for linking these analyses.

Main Methods:

• Theoretical economic modeling.
• Development of an impossibility theorem.
• Analysis of assumptions related to willingness-to-pay and quality-adjusted life-years (QALYs).

Main Results:

• Assumptions for a constant willingness-to-pay per health outcome unit are found to be highly unrealistic.
• An impossibility theorem demonstrates that linking CBA and CEA is not possible under specific conditions.
• The conditions include adherence to expected utility theory, welfare economic validity of QALYs, and the impact of illness on consumption enjoyment.

Conclusions:

• It is theoretically challenging and practically unwise to rely on a direct link between CBA and CEA within a welfare economic framework.
• The findings suggest that distinct approaches may be necessary for robust economic evaluations in healthcare.
• The study highlights limitations in integrating monetary and non-monetary health outcome valuations.