The distribution problem in economic evaluation: income and the valuation of costs and consequences of health care programmes

Abstract

To date, a common view in the health economics literature is that the applicability of cost–benefit analysis (CBA) is limited, due to the distribution problem which underlies its main method of valuation (e.g. willingness to pay). One view is that cost effectiveness analysis (CEA) overcomes these problems. We show that the same distributional concerns apply to non‐monetary valuations of health consequences, to measurement of costs and to the decision rules of CEA. Hence adopting CEA over CBA cannot be justified on the basis of ‘avoiding’ distributional considerations. The implications of our results are discussed, including alternative strategies for the use of ‘income‐based’ research findings in social decision‐making. Copyright © 2001 John Wiley & Sons, Ltd.