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Applied Health Economics and Health Policy
Published in: Applied Health Economics and Health Policy 5/2019

Open Access 01-10-2019 | Practical Application

Striving for a Societal Perspective: A Framework for Economic Evaluations When Costs and Effects Fall on Multiple Sectors and Decision Makers

Authors: Simon Walker, Susan Griffin, Miqdad Asaria, Aki Tsuchiya, Mark Sculpher

Published in: Applied Health Economics and Health Policy | Issue 5/2019

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Abstract

In most societies, resources are distributed by individuals acting in markets and by governments through some form of collective decision-making process. Economic evaluation offers a set of tools to inform collective decisions by examining the resource requirements and outcomes of alternative policies. The ‘societal perspective’ has been advocated, but less consideration has been given to what this should include and its practical implementation. This paper presents a framework for economic evaluation of policies with costs and outcomes falling on different sectors (e.g. health, criminal justice, education) and involving different decision makers. It extends the ‘impact inventory’ developed by the Second Panel on Cost-Effectiveness in Health and Medicine by considering all affected individuals and reflecting how outcomes attributed to an intervention can be compared with outcomes forgone as a result of resources not being available for other purposes. The framework sets out the series of assessments to be made, distinguishing points at which value judgements feed into the evaluation, and the implications of alternative judgements. These assessments reflect the institutional arrangements of public bodies, for example, their funding, the outcomes they consider important and their relative valuations of these outcomes. By avoiding the use of an abstract ‘societal perspective’, the contribution of the framework is to inform multiple decision makers with different objectives and provide practical guidance on overall societal impact.
Appendix
Available only for authorised users
Footnotes
1
By fact here, we refer to things that can be empirically estimated, and while estimation is subject to uncertainty, the true values are at least potentially knowable and, therefore, we define these as factual.
 
2
Note that this is a one-period illustration with no uncertainty; however, the inventory can be expanded to capture impacts across time and uncertain states of the world.
 
3
Market prices may reflect individuals’ willingness to pay for a unit of outcome in each dimension at the margin, but in the case of market failure and for things that are not bought and sold, it would be necessary to calculate shadow prices. Shadow prices reflect the best estimate of a price of a good if it were to be traded in a market with no market failures (e.g. using contingent valuation methods).
 
4
Other measures with similar characteristics include the disability-adjusted life-year (DALY) [39] and health-adjusted life expectancy (HALE) [40].
 
5
Further research has considered non-marginal impacts [41].
 
6
Whilst it may not be possible ex ante to identify the individuals on whom the opportunity costs fall, it is possible to set out the characteristics of the subgroups of those individuals. Similar issues exist for direct effects due to uncertainty about uptake and implementation and more generally stochastic uncertainty regarding whom among recipients of any healthcare intervention actually benefit.
 
7
For simplicity, we assume none of these costs were covered by co-payments and have potentially different opportunity costs.
 
8
For example, through better health leading to improved employability and increased earnings.
 
9
If this is contentious, as it is felt that prices may not reflect value, for example due to market failure, it may be desirable to capture the impact on each good separately (as dimensions of the inventory), or alternatively to use other estimates of value to aggregate them.
 
10
We assume, for simplicity, that this does not impact their consumption, although if there is also an important change in their consumption, this should also be estimated.
 
11
This gives the value of a unit of health in terms of units of consumption. Consumption is simply being used as the common numeraire; it is equally possible to convert consumption into health or both dimensions into another numeraire.
 
12
Based on the assumption that public sector budgets are set such that the ratio of the consumption value of the unit of outcome and the marginal productivity of the sector for that unit is the same across sectors \(\frac{{v_{\text{h}} }}{{k_{\text{h}} }} = \frac{{v_{\text{e}} }}{{k_{\text{e}} }}\). Initially this may be inaccurate, but as more evaluations are conducted more information is produced that could be applied to inform sector allocations.
 
13
We have incorporated motor vehicle costs into criminal justice for simplicity.
 
14
Some judgements, such as the choice of dimensions, may need to be made ex ante, and it will not be possible to consider the implications of, for example, a wider set of dimensions than those originally considered.
 
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Metadata
Title
Striving for a Societal Perspective: A Framework for Economic Evaluations When Costs and Effects Fall on Multiple Sectors and Decision Makers
Authors
Simon Walker
Susan Griffin
Miqdad Asaria
Aki Tsuchiya
Mark Sculpher
Publication date
01-10-2019
Publisher
Springer International Publishing
Published in
Applied Health Economics and Health Policy / Issue 5/2019
Print ISSN: 1175-5652
Electronic ISSN: 1179-1896
DOI
https://doi.org/10.1007/s40258-019-00481-8

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