New³ Cost Benefit Analysis

Abstract

As discussed in previous chapters, there are limitations in the existing methods of cost benefit analysis. For economic evaluation of health programs to be useful and meaningful, certain adjustments are needed- Omission of extra-welfaristic elements in social costs and social benefits, inappropriate measures of benefits, difficulties in measuring benefits and a lack of proper integration of cost benefit analysis methods of health programs with the underlying evaluation processes which make it difficult to understand how the cost benefit analysis is being used for social choices, narrow the scope of analysis. An evaluation method needs to be developed on the basis of the right and relevant principles of welfare economics and social choice theory (by explicating social preferences), so that it can test the economic and social efficiency of health programs, containing the benefits and costs which are measured adequately and appropriately. Extra-welfaristic considerations (such as equity, freedom, and so on) in ethics, incorporated in the integrated operational framework and methods of cost benefit analysis, can then be applied in the evaluation.