Social Science & Medicine 59 (2004) 885–887

ARTICLE IN PRESS

Book reviews

Cost–benefit analysis and health care evaluations

R.J. Brent; Edward Elgar, Cheltenham, 2003

In this volume the author sets out to ‘build a bridge’

between cost–benefit analysis (CBA), as developed by

economists, and the health care evaluation field,

associated with health economics and the techniques of

cost minimisation analysis (CMA), cost effectiveness

analysis (CEA) and cost utility analysis (CUA). One

might ask whether there is need of, or room for, another

text on the economic evaluation of health care

programmes. However, the author identifies the differ-

ence between this volume and the existing collection of

texts in the preface. The big difference, we are told, is

that in this text, CBA is used as the foundation for

economic evaluation. The other methods are at best

short cuts and at worst incomplete CBAs. Much of the

book is devoted to a systematic exploration of the nature

of these ‘short cuts’ leading to the final conclusion that

although CBA may have many weaknesses, it remains

the best evaluation framework.

At this point, I should confess that I needed no

convincing of this, having been a frustrated participant

in the ongoing debate in the health economics literature

about the role and limitations of the ‘short cut’

approaches and their misuse as a means of informing

health care resource allocation decisions. However,

Brent provides an excellent exposition of the theoretical

basis for CBA that has been largely overlooked or

ignored in existing texts.

The volume is organised systematically around

exploring how each ‘short cut’ approach corresponds

to the economic principles and concepts that underlie

CBA; and the consequences for the departure from these

principles and concepts. The ‘arguments’ presented are

cumulative with the problems encountered in CMA

being ‘inherited’ by the higher level of analysis (or short-

cut) CEA with the addition of its own inherent

problems. In the same way, the problems of CEA are

inherent in, but added to by CUA. The volume ends

with three chapters dealing with some of the common

criticisms of CBA by those proponents of the ‘short cut’

approaches.

The volume is much weightier (both physically and

intellectually) than existing texts on economic evaluation

of health care. However, this is the nature of the beast.

CEA and CUA make economic problems of allocating

scarce health care resources seem that much simpler.

Experience shows us that their uses have generally been

unsuccessful and largely not involved matters of

allocating scarce resources, but instead provided

flawed arguments that resources should not be as scarce

as they are, leading to increased expenditures without

any evidence about the net change in total health

outcomes.

The downside of this is that the book is unlikely to be

accessible to those without a background in economics

(which will probably include many practitioners of

health economics). But then I wouldn’t expect a

textbook on brain surgery to be accessible to the average

economist. We could certainly simplify brain surgery—

but would we expect to achieve the same outcomes? This

is not an argument about academic turf warfare, but of

avoiding compromising the scientific foundations of a

discipline in order to present the illusion of simplicity. If

economic evaluation is to address the problems facing

decision-makers in a rigorous way then the challenges

presented by Brent have to be addressed.

The book is unlikely to satisfy the needs of health

care professionals and members of the pharmaceutical

industry wanting to add a course on economic

evaluation to their post-graduate program. In

contrast, it provides an excellent resource for use on

introducing social science students generally, and

economics students in particular, to the application of

economics to problems of resource allocation in health

care.

Despite the many strengths of the content and

presentation of the volume, the author has done himself

a disservice in the introduction chapter in which the

context for the different evaluation techniques is laid

out. Errors of ‘interpretation’ that underlie CEA and

CUA in order are repeated here; while ambiguous

terminology is used in ways that can undermine both

understanding and analysis.

For example we are told that recognising individual

differences (between patients) is important because

‘‘yindividualpreferencesgreatlydetermineoutcomesy’’

without recognising that variation also applies to the

effectiveness of interventions independent of prefer-

ences. Interventions are generally characterised by a

distribution of outcomes though little if any attention is

given in the health economics literature to the distribu-

tions of outcomes or the nature (random or otherwise)

of these distributions.

ARTICLE IN PRESSBook reviews / Social Science & Medicine 59 (2004) 885–887886

The example presented of the comparison of gallstone

treatments is wrong. In Table 1.1, the laprascopic

procedure has a lower QALY loss than ESWL but in

the text it is described as a higher QALY loss.

Benefit–cost ratios are derived from the cost–benefit

criterion implying that decisions can (or should) be

made on the basis of benefit per dollar spent. But this

cannot be used to determine efficient allocation of a

health care budget, just as it cannot be used to determine

the efficient allocation of a household budget. For

example, the benefit per unit cost of purchasing a Ferrari

may far exceed that of a Ford but because the

alternatives involve different levels of investment their

opportunity costs are very different.

The example of the comparison of work site versus

home hypertension reduction programmes presented

later in the chapter is undermined by the same

‘reductionist’ thinking. The alternatives are summarised

as the work site programme generating additional costs

of $31.53 per patient and additional effects of 5.6 mm

Hg reduction in blood pressure per patient. This, we are

told, means ‘‘that 1 mm Hg reduction in blood pressure

can be purchased for $5.63’’. The assumption of perfect

divisibility and constant returns to scale that this

interpretation makes lies behind the frustrated expecta-

tions of decision-makers. Health benefits rarely, if ever,

can be purchased on the basis of simple single units, no

matter how attractive it may be to present findings in

this way. This simply presents an ‘average rate of return’

estimate for a particular level of investment. Unfortu-

nately the author doesn’t identify what the total

investment required to get this average rate of return

was, and hence prevents the reader, or the decision-

Health expectations for older women: international

perspectives

Sarah B. Laditka (Ed.); The Haworth Press, Inc., New

York, 2002, 196pp

This book presents data on the expected health of

elderly people, with a special focus on older women. The

data presented are variations of health expectancy

indicators, such as healthy life expectancy, disability-

free life expectancy, mental health expectancy and

others. The effect of a range of variables on these

indicators is analyzed, such as demographic and social

factors (gender, race or ethnicity, education, income,

marital status), behavioral factors (overweight or body

maker considering the opportunity cost of the pro-

gramme.

It is frustrating to find later in the chapter that the

author notes this problem (what he terms the ‘propor-

tionality assumption’ that arises from using ratios) when

discussing the colorectal screening example. It is equally

frustrating that no consideration is given to the

traditional programming solutions to this problem that

are well established in both the general economics

literature and the more specific health economics

literature.

Finally, confusion arises from the interchangeable use

of the terms benefits, outcomes, effects and conse-

quences, in some cases even within the same paragraph.

Clearly, one consequence of a potential intervention is a

net change in costs. The ambiguous use of terminology

in this way can lead to practitioners treating cost

consequences as (negative) effects (outcomes, benefits)

which can have a major impact on the resulting ratios

and the decisions based on these ratios.

Hopefully, these rather profound issues will not deter

students from using the rest of the volume to further

their understanding of the topic. If so, the author may

eventually produce a second edition which will provide

an opportunity to revise the introductory chapter in a

way that brings it up to the standard of the rest of the

book.

Stephen Birch

Centre for Health Economics and Policy Analysis,

McMaster University, Hamilton, Ont., Canada L9C 2C1

E-mail address: birch@mcmaster.ca

doi:10.1016/j.socscimed.2003.11.020

mass index, smoking, physical activity), chronic condi-

tions and ‘health profiles.’ Data sources are large

longitudinal follow-ups and annual cross-sectional

surveys from a variety of countries such as USA,

Canada, The Netherlands, United Kingdom, European

Community and Japan. Data is analyzed using sophis-

ticated statistical methods such as multi-state life tables,

discrete-time Markov chains and microsimulation pro-

cedure, the Grade of Membership method, or the

Sullivan method of constructing health expectancy.

The aim of the book, as stated in the preface, is ‘‘to

gain a richer understanding of women’s health and the

complex issues of life quality at older ages in many

countries.’’ However, as a social scientist reader, this

collection of papers suffers from a limitation that I have