Table of Contents

Setting Priorities for HIV/AIDS Interventions

Setting Priorities for HIV/AIDS Interventions

A Cost–Benefit Approach

Robert J. Brent

HIV/AIDS is much too complex a phenomenon to be understood only by reference to common sense and ethical codes. This book presents the cost–benefit analysis (CBA) framework in a well-researched and accessible manner to ensure that the most important considerations are recognized and incorporated.

Chapter 38: What is So “Social” About CBA? Fundamentals of CBA

Robert J. Brent

Subjects: development studies, development economics, economics and finance, development economics, health policy and economics, public finance, social policy and sociology, health policy and economics


What makes CBA “social” is that it tries to specify when any intervention makes society better off. There are two main objectives that are to be used to make the determination as to whether something is a social improvement. The first is economic efficiency and the current chapter is devoted to this objective. The second is equity, and the next two chapters will examine this objective. In the process of outlining the principles behind economic efficiency, we will explain what the crucial value judgments are that need to be made to justify the methodology of CBA, that is, we will be identifying the fundamentals of CBA. ECONOMIC EFFICIENCY AND WILLINGNESS TO PAY Mainstream economics assumes that society is individualistic. For an intervention to make society better off, one first has to make individuals better off. How does one know whether individuals are better off? One looks at their net benefits. If the willingness to pay for all the outputs that individuals receive exceeds their willingness to accept compensation for all the inputs they supply, then net benefits are positive and they are better off. To find out whether society is better off one just sums the net benefits (both positive and negative) for all the individuals to obtain aggregate net benefits. If this is positive then the intervention is worthwhile. After all interventions that have positive net benefits are undertaken, then net benefits are highest and “economic efficiency” has been realized. In other words, the idea of economic efficiency is...

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