pdf [5.3MB] - Department of Families, Housing, Community Services

FIGURE 1-1: PREVALENCE AND INCIDENCE APPROACHES TO COST MEASUREMENT2000 2009 2018A* AB* B B**C C*Incidence costs (2009) = C + present value of C*Prevalence costs (2009) = A + B + CThese methodologies present information in slightly different ways and have differentapplications. The prevalence approach is a ‘snapshot’ as it reports impacts in one year and,in general, prevalence estimates can be easier to understand by policy makers as they relateto a single point in time. Also, the financial value of impacts can be compared to measuressuch as gross domestic product (GDP). The incidence approach reports the lifetime impactsassociated with a condition; as policy interventions are focused at preventing NFF, thismethodology is most relevant for its application in CBA or CEA studies.Aetiology, data sources and the study design used to track outcomes are key decidingfactors determining which approach is best. In this instance an incidence approach isconsidered most appropriate, due to these factors and the lag times between exposure to thefamily environment and associated outcomes.A potential difficulty with the incidence approach is conceptually defining a ‘new case’ ofNFF. It is easier to define the incidence of a disease where an initiation of a change in aperson’s health state is clear, in this case NFF exposure to this environment (or risk factor)occurs over a potentially long period of time, with some fluctuations in the family environmentresulting from external factors (as the result of changes in health, social or economiccircumstances). Ideally, to alleviate this problem there would be a survey question thatasked respondents when NFF first began, or when they first became aware of it. In theabsence of such data, incidence could be proxied from a snapshot of children exposed toNFF in a base year (one year current prevalence), together with estimates of the averageduration of exposure to NFF.10