A Cost–Benefit Approach
Chapter 39: Social and Private Perspectives in CBA
The perspective in CBA is very broad and very long. It embraces the effects on everyone in society, now and in future generations. A social evaluation does not consider just the parties that are directly involved with an intervention, that is, the firms (the hospitals and the physicians) and the consumers (the patients as clients). It also covers those indirectly affected, including the family members of the patients and even the general taxpayer. These third-party effects are called “external effects”. Strictly then, CBA should be called “social” cost–benefit analysis to recognize the all-inclusive nature of the evaluation. However, this usage is not widespread either within or outside the health care field (it has the connotation of “socialism”). So we have, throughout this book, just referred to the analysis as CBA, leaving the social connotation implicit. In the health care field it is considered good practice to make the perspective explicit at the outset of a study. It is thought necessary to specify whose perspective the study is from: is it that of the hospital, the client, the government or society. Although, as we show below, an economic evaluation has usefulness from any perspective, it is only the social perspective that is important for social decision-making. A study that ignores the costs for the families of care-giving to those sick with opportunistic infections due to AIDS is not very useful for deciding on the best place to treat AIDS patients. In this chapter we will go through a particular application,...
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