ABSTRACT
This chapter provides an appreciation of the main concepts underpinning the economic evaluation of health services. It examines some of the theoretical underpinnings of economic evaluation and the key concepts that distinguish economic evaluation from other forms of evaluation in health. Economic evaluation stresses the marginal costs and marginal benefits of a health service as fundamental concepts for policy analysis. Often decisions relating to health services are not about whether to introduce a health service per se, rather whether to have a little more or less of it. The main limitation of cost—effectiveness analysis is that it can only compare health services or interventions whose benefits are measured in the same units of effectiveness. Techniques such as the 'social audit' and 'cost consequences analysis' provide a qualitative description of the parties affected by health service options, the way in which their interests are affected by the options, together with a description of arrangements for public participation.
