Theory and Methods of Economic Evaluation of Health Care

Volume 4 of the series Developments in Health Economics and Public Policy pp 1-6


  • Magnus JohannessonAffiliated withStockholm School of Economics

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Cost-benefit analysis is an analytic tool designed to promote economic efficiency in the allocation of scarce resources to public projects or technologies. The criterion of economic efficiency states that if those citizens who benefit from a project had to bear its entire cost, they would consider it worth paying for. Where projects are inefficient, those who benefit would reject the project if they were required to pay for it in its entirety.