A Comparison of Cost-Benefit and Cost-Effectiveness Analysis in Practice: Divergent Policy Practices in Sweden

Abstract

This paper compares the implementation of the two economic evaluation methods Cost-Effectiveness/Utility (CEA/CUA) and Cost-Benefit Analysis (CBA) as tools for allocation of national public funds in the health and transport sector in Sweden, respectively. We compare the recommended values for important economic parameters such as the social discount rate, the marginal cost of public funds, and the explicit and implicit valuation of health, and document a number of substantial and unexplained differences in implementation. Such differences are problematic considering that the increasing use of economic evaluations to guide policy decisions also has implied an overlap of application areas. We conclude with a discussion on the need of a harmonized procedure for economic evaluations in the public sector in order to reduce the risk of inefficient allocations purely due to different applications of the methods. Published: Online February 2017. In print December 2017.