International Journal of Technology Assessment in Health Care

General Essays

On the (Near) Equivalence of Cost-Effectiveness and Cost-Benefit Analyses

Charles E. Phelpsa1 and Alvin I. Mushlina1

a1 University of Rochester School of Medicine and Dentistry


Many people believe that cost-effectiveness (CE) and cost-benefit (CB) analyses require different assumptions. However, when CE analysis supports decisions to use medical resources, it makes the same assumptions that CB analysis requires. They are mathematically equivalent. Differences between CE and CB hinge more on reporting style than on fundamental assumptions.