Abstract

Cost-benefit analysis (CBA) is the root of Health Economics and is based on the welfare theory. CBA is the broadest economic evaluation (EE) method that assesses all benefits and costs in monetary units; the production of welfare is expressed in terms of net benefit (the difference between benefits and costs). The main goal in the welfarist approach is to maximize welfare according to individuals’ preferences. The application of CBA principles faces multiple obstacles, mainly because valuing health in terms of monetary units is challenging and raises ethical and methodological constraints. In the health sector, CBA has received relevant criticism, leading to the emergence and adoption of other methods of EE, such as cost-effectiveness analysis (CEA) and cost-utility analysis (CUA). However, attempts to apply welfarist principles to CEA were far of being accepted, and consensus among health economists in this regard still does not exist. The extra-welfarist approach encompassing CEA and CUA has progressed toward maximizing health outcomes and focusing on equity and fairness issues. The most common technique used in CBA to elicit preferences is the contingent valuation (willingness to pay). Despite the challenging task of valuing mental health outcomes, some studies demonstrate the feasibility of this technique in people with mental disorders, though some level of inconsistency and inaccuracy in respondents’ answers was reported. Despite methodological limitations among all EE methods applied to health, there is a growing interest in CBA and, more specifically, in discrete choice experiment, especially for health services and public health policies, and in exploring patients’ treatment preferences. The Mental Health field adds challenges to CBA regarding the complexity of defining and measuring outcomes representing mental health maximization. Document type: Book

Abstract

Governments worldwide face the difficult challenge of deciding which infrastructure projects to prioritize and select for implementation, given the limits of available funding and the need to attain their developmental goals. The key objective of this report is to conduct a comparative exercise between the World Bank's Infrastructure Prioritization Framework, a multicriteria analysis–based methodology to project prioritization, and a more complex cost-benefit analysis–based approach. The report focuses on Chile, which has a well-institutionalized evaluation process that uses cost-benefit analysis to assess projects on their quality and ability to generate value for money. The analysis compares the results of the Infrastructure Prioritization Framework alongside Chile's current cost-benefit analysis–based and multicriteria analysis approaches to the same subsets of projects in the road transport and water reservoir subsectors, respectively. The results show that the Infrastructure Prioritization Framework has application beyond its original proposition and can complement a traditional cost-benefit analysis by directly considering social and environmental policy goals that are otherwise difficult to quantify in a cost-benefit analysis. The analysis also finds that in Chile there is a discrepancy between the stated goals and objectives of the appraisal system and the actual implementation. In the case of transport sector projects, there is an evident deviation between cost-benefit analysis–based selection policy and actual decisions made for project implementation. In the case of water catchment selection, there is a bias toward projects with higher financial-economic performance as compared to social-environmental performance, despite policy intentions to afford consideration to environmental and social development goals. Document type: Book