Methods for Measuring and Estimating Costs

Abstract

This chapter focuses on costing methods usually applied in cost analysis and health-related economic evaluations. The quality of an economic evaluation depends on the quality and precision of data collection and on transparency and comprehensivenness of costing resources. Costs, from an economic perspective, are related to opportunity costs; this economic conceptualization is different from a financial perspective. Costs are classified as direct, indirect, intangible, and total costs. In this chapter I focus exclusively on the measurement of direct costs. Costing involves multiple steps: choosing the perspective of the study; identifying the component of costs, collecting data on costs and services use, estimating the unit cost for each resource, and estimating costs. Although the majority of economic evaluations includes only direct costs, indirect costs correspond to the major parcel of diseases costs. Mental disorders, for instance, cause innumerable negative externalities and indirect costs, and the benefits of psychiatric and psychosocial interventions go beyond clinical improvement, leading to systematic recommendations for measuring costs in a comprehensive way, such as using societal perspective. There is a debate among health economists regarding the inclusion of indirect costs in the economic evaluation, though, thieir exclusion in assessing cost-effectivenness, for instance, might understimate the economic impact of psychiatric intervention. Costing methods for indirect costs are discussed in another chapter in this book.