BOOKS OF RtfiDIfGS - PAHO/WHO

I Klaman
Ctitena for Inchmion
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The major reason for the shortness of the list of complete cost-beneflt studies is that
most studies conducted to date are limited in one or more respects. First, in the 1970s.
there seems to be little point to considering nonempirical analyses. Thus, today Mushkin's
seminal work (41) in conceptualizing the application of cost-benefit analysis to the health
feld must be excluded from consideration.
A second, perhaps more critical, requirement for including a study is that both the
benefits and costs of specified programs be measured and valued simultaneously, with
their respective present values juxtaposed and compared. By this criterion, the majority
of empirical studies so far performed in the health field are excluded, including that by
Fein (42) on mental illness, by Rice (43, 44) on a number of diagnostic categories, and
my own on syphilis (45) and on heart disease (46). While all of these studies attempt to
measure and value the cost of a disease, thereby, in effect, measuring and valuing the total
benefits of eradicating that disease, none attempts to estimate the costs of conducting
programs with specified contents and aims. Although each study has made a contribution
to the counting, measurement, and valuation of direct and indirect tangible benefits, and
two have explored the valuation of intangible benefits, none has presented a comparison
of costs and benefits under a specified set of conditions.
The above two requirements-quantification and juxtaposition of costs and
benefits-impress me as being incontestable. A third requirement can be defended as
equally necessary: that benerits and costs reflect a known link, alluded to above, between
program and outcome, i.e. between inputs and outputs. Such a link should be empirically
based. Today, speculative or hypothetical relationships do not suffice (47). To apply
economic valuation to hypothetical relationships between programs and outcomes is to
indulge in an academic exercise, since the results of such valuation cannot transcend the
quality of the underlying measurements. Such an exercise is not only idie, in that it can
make no contribution to policy formulation, but it may be counterproductive if it
obscures the fact that the relationships between inputs and outputs are not yet known
and remain to be ascertained (14, p. 29).
In an article discussing the contribution of health services to the U.S. economy,
Fuchs (48) has demonstrated the importance of information concerning the efficacy of
health services. The economist can indicate the types of data he requires, but he is seldom
in a position to procure them by himself; he must rely on other investigators in health
services research to help him to obtain them.
This third requirement implies an important corollary. The size of a problem, as
measured by the total costs of a disease, is not a reliable guide for policy (49, 50). Even in
communicable diseases, less than eradication may be an acceptable goal. For most
diagnostic conditions it is essential to know the extent to which a given program is likely
to reduce the size of the problem. This point is often overlooked. It lends itself to
oversight particularly when benefits and costs are not juxtaposed. In the early
cost-benefit studies in the health field there may have been a further tendency for
economists to attribute greater efficacy to medical care than was perhaps warranted (51).
Weisbrod (13) performed the earliest of a small number of such studies and his remains
one of the most systematic. He compared the benefits and costs of intervening in three
diseases-cancer, polio, and tuberculosis. Drawing in a creative way on Bowen's work in
deriving the demand curve for a public good (52), Weisbrod was frequently reduced to