ABSTRACT
This chapter uses the North Brownstead evaluation to illustrate the analysis of cost-effectiveness data. The analysis of the costs and outcomes data and presentation of the cost-effectiveness results depend on the economic objectives that were defined for the evaluation. With average cost-effectiveness the option which has the lowest cost per unit of outcome or greatest outcome per £ 1 of cost represents the most cost-effective option. A general principle of cost-benefit analysis is that people and agencies prefer to delay costs but desire immediate benefits. Hence future benefits and costs should have a lower valuation compared to current benefits and costs. Uncertainty exists in the accuracy of estimates and assumptions used in a cost-effectiveness analysis. Sensitivity analysis provides information to assess whether the relative cost-effectiveness of various options alters due to the inclusion of high and low estimates for one or more of the key variables of costs, outcomes and discount rates.
