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Cost-Benefit Analysis

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Mental Health Economics

Abstract

Cost-benefit analysis (CBA) is the root of Health Economics and is based on the welfare theory. CBA is the broadest economic evaluation (EE) method that assesses all benefits and costs in monetary units; the production of welfare is expressed in terms of net benefit (the difference between benefits and costs). The main goal in the welfarist approach is to maximize welfare according to individuals’ preferences. The application of CBA principles faces multiple obstacles, mainly because valuing health in terms of monetary units is challenging and raises ethical and methodological constraints. In the health sector, CBA has received relevant criticism, leading to the emergence and adoption of other methods of EE, such as cost-effectiveness analysis (CEA) and cost-utility analysis (CUA). However, attempts to apply welfarist principles to CEA were far of being accepted, and consensus among health economists in this regard still does not exist. The extra-welfarist approach encompassing CEA and CUA has progressed toward maximizing health outcomes and focusing on equity and fairness issues. The most common technique used in CBA to elicit preferences is the contingent valuation (willingness to pay). Despite the challenging task of valuing mental health outcomes, some studies demonstrate the feasibility of this technique in people with mental disorders, though some level of inconsistency and inaccuracy in respondents’ answers was reported. Despite methodological limitations among all EE methods applied to health, there is a growing interest in CBA and, more specifically, in discrete choice experiment, especially for health services and public health policies, and in exploring patients’ treatment preferences. The Mental Health field adds challenges to CBA regarding the complexity of defining and measuring outcomes representing mental health maximization.

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  1. Centre of Economic Mental Health (CESM), Department of Psychiatry, Universidade Federal de Sao Paulo, Rua Borges Lagoa 570, 1° andar, São Paulo, Brazil, 04038-000

    Denise Razzouk

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  1. Centre of Economic Mental Health, Department of Psychiatry, Universidade Federal de São Paulo, São Paulo, Brazil

    Denise Razzouk

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Razzouk, D. (2017). Cost-Benefit Analysis. In: Razzouk, D. (eds) Mental Health Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-55266-8_4

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  • DOI: https://doi.org/10.1007/978-3-319-55266-8_4

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