A Cost–Benefit Approach
Chapter 31: Cost-Effectiveness Practice: The Benefits of ARVs
There is a common saying: “Put your money where your mouth is”. More prosaically, the expression is: “Where your treasure is, there is your heart”. What these sayings imply is that if you say you care for something, then you should be willing to back up the words by giving up your money to support it. This is the basic idea behind the revealed preference methodology that we are going to use in this chapter to carry out an evaluation of antiretroviral drugs (ARVs). To use the CEA method, one needs to have an estimate of the price of a DALY. We present a study that estimated the value of a DALY derived from the revealed preferences of the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM). THE REVEALED PREFERENCE APPROACH APPLIED TO INDIVIDUAL AND SOCIAL DECISIONS The revealed preference approach is not something that should be entirely new to the reader as we have already used it in Chapters 26 and 27 to justify the WTP method when dealing with individual preferences as embodied in market behavior. Recall that we said that if someone was willing to pay $4 for a hamburger, then that amount (at least) is what the hamburger must have been worth to the person paying that amount for it. It was this reasoning that we invoked when we argued that the demand curve for condoms is also the marginal benefit curve for condoms as it records the WTP that was revealed by people when...
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