Endogenous Patient Responses and the Consistency Principle in Cost-Effectiveness Analysis

Liqun Liu, Andrew J. Rettenmaier and Thomas R. Saving

Medical Decision Making, 2012, vol. 32, issue 3, 488-497

Abstract: In addition to incurring direct treatment costs and generating direct health benefits that improve longevity and/or health-related quality of life, medical interventions often have further or “unrelated†financial and health impacts, raising the issue of what costs and effects should be included in calculating the cost-effectiveness ratio of an intervention. The “consistency principle†in medical cost-effectiveness analysis (CEA) requires that one include both the cost and the utility benefit of a change (in medical expenditures, consumption, or leisure) caused by an intervention or neither of them. By distinguishing between exogenous changes directly brought about by an intervention and endogenous patient responses to the exogenous changes, and within a lifetime utility maximization framework, this article addresses 2 questions related to the consistency principle: 1) how to choose among alternative internally consistent exclusion/inclusion rules, and 2) what to do with survival consumption costs and earnings. It finds that, for an endogenous change, excluding or including both the cost and the utility benefit of the change does not alter cost-effectiveness results. Further, in agreement with the consistency principle, welfare maximization implies that consumption costs and earnings during the extended life directly caused by an intervention should be included in CEA.

Keywords: consistency principle; cost-effectiveness analysis; quality-adjustified life-years; survival consumption costs (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0272989X11427958 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:medema:v:32:y:2012:i:3:p:488-497

DOI: 10.1177/0272989X11427958

Access Statistics for this article

More articles in Medical Decision Making
Bibliographic data for series maintained by SAGE Publications ().