28. 10 riyals to reduce
your chance of
dying by
1 in 100,000?
Value of Life = Cost ÷ Probability
Cost = 10
Probability = .00001
Value of Life = 10 ÷ .00001
Value of Life = 1,000,000
29. 500 riyals to
reduce your
chance of dying by
1 in 4,000?
Value of Life = Cost ÷ Probability
Cost = 500
Probability = .00025
Value of Life = 500 ÷ .00025
Value of Life = 2,000,000
35. Cost Benefit Analysis
What is the the dollar value of
the costs and benefits?
Cost Effective Analysis
Given an objective, what are
the costs of various
alternatives to achievement?
36. Incremental Cost
Effective Ratio
ICER
--
Cost new
Effectiveness new
Cost old
Effectiveness old
--
C1
E1
C2
E2
38. Option Cost
Effectiveness
Life Years
Cost
Effectiveness
Current 20,000 2 10,000
A 100,000 12 8,333
B 5,000 1 5,000
C 50,000 4 12,500
D 15,000 1 15,000
46. Standard Gamble
Two choices
A. Live with less than perfect
condition
B. Procedure with probability of
perfect health or
(one minus probability) of death
47. Standard Gamble
Two choices
A. Blind
B. Cure blindness or death
Probability on procedure = HUI
48. Time Trade-Off
Two choices
A. Live X years with perfect health
B. Live Y years with condition
X÷Y = HUI
50. CEA versus CUA
Option Cost
Life
Years CEA
Health
Utility
Index
QALY CUA
Current 20,000 2 10,000 0.7 1.4 14,286
New 110,000 12 9,167 0.4 4.8 22,917
Gain 90,000 10 9,000 3.4 26,471
New 2 110,000 12 9,167 0.8 9.6 11,458
Gain 90,000 10 9,000 8.2 10,976
51. Summary
Scarcity requires choices
Cost-Benefit Analysis - CBA
What is a life worth?
Human Capital vs. Willingness-to-Pay
Cost Effectiveness Analysis - CEA
Life Year Saved - LY
Ratio Comparisons
Cost Utility Analysis - CUA
Health Utility Index - HUI
Survey, Standard Gamble, Time Trade Off
Quality-Adjusted Life Year - QALY
Ratio Comparisons