Table 1 Overview of cost-benefit analysis (CBA) approaches to monetise benefits
Method | Rationale | Major limitations and uncertainties | How we accounted for methodological uncertainties |
|---|---|---|---|
Human capital | ▪ Individual perspective ▪ Indirect benefits are productivity losses avoided by prevented or reduced morbidity and mortality ▪ Productivity losses are valued by individual’s cumulative income over the entire time absent from work | ▪ Considers productivity loss incurred only by economically active individuals ▪ Leads to biased decisions in favour of high-income earners and economically active individuals | ▪ Sensitivity analysis was conducted to include homemakers in the calculation of productivity loss averted |
Friction cost | ▪ Employer perspective ▪ Indirect benefits are productivity losses avoided by prevented or reduced morbidity and mortality ▪ Productivity losses are valued by individual’s gross earnings over the friction period ▪ Assumes there always exists some level of involuntary unemployment ▪ The sick/deceased worker is replaced by another worker who otherwise would have remained unemployed | ▪ Disease- and job-specific data needed for estimating the friction period are often unavailable ▪ Considers productivity loss incurred only by economically active individuals ▪ Leads to biased decisions in favour of high-income earners and economically active individuals | ▪ Sensitivity analysis was conducted to vary friction period – 55, 69 and 90 days – to account for uncertainties regarding the vacancy duration ▪ Sensitivity analysis was conducted to include homemakers in the calculation of productivity loss averted |
Value of a statistical life (VSL): Revealed Preference | â–ª Individuals implicitly reveal how much they value mortality risk reduction in real markets (e.g. wage-risk trade-offs) â–ª VSL is derived from observed behaviours | â–ª Focus is mostly on job-related risks among working-age population, which largely result from injuries rather than illnesses | â–ª A range of VSL estimates, including a VSL for cancer after adjusting for a 10-year latency period was used |
VSL: Stated Preference | â–ª Use contingent valuation with hypothetical scenario (i.e. surveys) to derive VSL | â–ª Extra effort may be required to encourage survey participants for valid responses | â–ª A range of VSL estimates, including one from a willingness-to-pay (WTP) study done in cervical cancer patients was used |
Monetisation of quality adjusted life years (QALYs) (QM) | ▪ QALY captures a broad range of health benefits ▪ QALY can be monetised by multiplying the WTP with gains in QALYs | ▪ Individuals cannot be expected to have a constant rate of substitution between QALYs and wealth | ▪ Our QM approach with a £23,000/QALY WTP is analogous to NICE’s cost-effectiveness reference case, which has a cost-effectiveness threshold of £20,000–£30,000/QALY [9] |