Better Economic Tools for Evaluating Health and Development Investments

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On the eve of the 1980s Water Decade, Walsh and Warren (1979) advocated a selective package of vaccinations and oral rehydration therapy (ORT) as the most cost-effective way to reduce mortality in developing countries. That study, cited 1000 times, and similar economic evaluations had the effect of dampening interest in campaigns for clean water and sanitation. ORT was one of the greatest life-saving innovations of the twentieth century, but cost-effectiveness analysis (CEA) cannot make valid comparisons between preventive public health intervention (such as sanitation), and specific therapies (such as ORT). The full benefits of clean water and sanitation are much broader than the effect of PRT and include: direct reduction in morbidity and mortality for adults and children from multiple water-borne pathogens; savings in time and calories expended on carrying water; increase in school enrollment for children released from the chore of fetching water; fewer diarrhea-related absences, greater school success, and thus higher returns to investments in education. Conventional cost-effectiveness analyses appear to validate the superiority of single-input, single-output interventions because they do not measure heterogeneous or diffuse benefits, unanticipated spillover benefits, or benefits that take some time to appear. The failure of economists and policy makers to find ways to value multiple outcomes or to share costs among multiple agencies results in 'missing markets' for multisectoral investments in public health and human development. [excerpt]

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Original version is available from the publisher at: http://journals.lww.com/aidsonline/Citation/2014/01280/Better_economic_tools_for_evaluating_health_and.16.aspx