Cost Benefit and Cost Effectiveness Analysis

This course introduces two related analytic tools used to structure policy problems and evaluate options: cost benefit and cost effectiveness analysis. These tools apply economic methods to facilitate a more efficient allocation of resources in situations where markets are not working well. Cost Benefit analysis is used in fine tuning public investments and regulations. It consists of techniques for converting all the estimated inputs and outcomes into current dollar equivalents. Cost-effectiveness can be used whenever all outcomes can be expressed in a single non-financial metric, but has been most commonly used in health care, where decision makers may value all people's health equally and are reluctant to assign a dollar value to health.