In cost-benefit analysis

In a cost-benefit analysis, both costs and consequences are valued in dollars and the ratio of cost to benefit (or more commonly benefit to cost) is computed. Cost-benefit analysis has been used for many years to assess the value of investing in a number of different opportunities, including investments (or expenditure) for health care services. Cost-effectiveness analysis attempts to overcome (or avoid) the difficulties in cost-benefit analysis of valuing health outcomes in dollars by using nonmonetary outcomes such as life-years saved or percentage change in biomarkers like serum cholesterol levels. Cost-minimization analysis is a special case of cost-effectiveness analysis in which the outcomes are considered to be identical or clinically equivalent. In this case, the analysis defaults to selecting the lowest-cost treatment alternative. Cost-utility analysis is another special case of cost-effectiveness analysis in which the value of the outcome is adjusted for differences in patients preferences (utilities) for the outcomes. Cost-utility analyses are most appropriate when quality of life is a very important consideration in the therapeutic decision. 

An important issue is how to deal with altruism (i.e. that people are concerned about other people s welfare or safety) in cost-benefit analysis. 

However, some uncertainty will always exist and should not be an excuse for postponement of any action. Probabilistic methods for dealing with uncertainty in cost/benefit analysis in this area have been developed by a UNECE expert group. 

A popular way to justify business expenditures is comparing expenditures to the benefits achieved using financial terms. In cost-benefit analysis, the first task is to estimate the dollar values of all benefits and costs for a program. The program may be safety. Then one can compare the costs to the benefits. It is difficult to convert all costs and benefits to quantitative or financial terms. One may have to create some methods for converting qualitative items to costs. If benefits exceed costs, a program has financial value. If costs exceed benefits, the program is questionable. 

The concept of intensity of application of methods is also a factor in cost-benefit analysis, since it affects both the effectiveness of a method and its costs. It would be plausible to assume a law of diminishing returns applies to effectiveness i.e. a greater intensity of application results in improved assurance, but the rate of improvement achieved decreases with increasing intensity. 

The method adopted in many industries is to use a Value of Preventing a Fatality (VPF). The VPF is the amount that an organisation will spend to reduce risk by a single fatality, and is used in cost benefit analysis (CBA) to assess reasonable practicability. The costs and benefits of a potential risk control are evaluated, and if the cost per life saved is less than or roughly equal to the VPF, the risk control is regarded as reasonably practicable and must therefore be implemented. The quantitative approach was formalised by the Health and Safety Executive (HSE) in its 1988 paper (updated in 1992) The Tolerability of Risk from Nuclear Power Stations and its 1989 paper Quantified Risk Assessment its Input to Decision Making Whilst the 1988 paper was developed for the nuclear industry, its principles have been applied widely. 

In cost-benefit analysis, a decision is deemed acceptable if the benefits exceed the cost of protection. Costs and benefits are expressed completely in monetary terms. The cost benefit model can be expressed as ... 

Neutrality with respect to distribution It does not matter who gets the benefits of a measure and who pays the costs. All that matters is that overall societal benefits are greater than costs. It is not common in cost-benefit analysis to explicitly identify winners and losers the failure to do so is often raised as a point by critics of cost-benefit analysis (Nord et al., 1999). 

The research was unable to identify improved models of the effect of street lighting on accidents that could be used in cost-benefit analysis. 

Process Hazards Analysis. Analysis of processes for unrecogni2ed or inadequately controUed ha2ards (see Hazard analysis and risk assessment) is required by OSHA (36). The principal methods of analysis, in an approximate ascending order of intensity, are what-if checklist failure modes and effects ha2ard and operabiHty (HAZOP) and fault-tree analysis. Other complementary methods include human error prediction and cost/benefit analysis. The HAZOP method is the most popular as of 1995 because it can be used to identify ha2ards, pinpoint their causes and consequences, and disclose the need for protective systems. Fault-tree analysis is the method to be used if a quantitative evaluation of operational safety is needed to justify the implementation of process improvements. 

Once the options have been clearly defined it will be necessary to carry out a cost-benefit analysis of each option. This has two main objectives. First, the overall cost of the project will need to be assessed to determine whether or not it is financially viable and, second, to ensure that those who will be required to incur expenditure are fully aware of the commitment needed. The financial benefits to users of the waters for recreation, fisheries, navigation, etc., are relatively easy to determine, but monetary valuation of the environmental benefits such as conservation and general amenity will be more difficult to define. As yet this aspect of the cost-benefit analysis has not been fully developed in the UK. Having determined a range of options and costs for eutrophication control in a particular catchment, consultation on the details of the Action plan with all those involved is needed before any plan can be implemented. 

Covernment and regulatoi y decisions. Sometimes these decisions are based on some type of quantitative risk analysis, and they provide some guidance on society s expectations with regard to risk management. In some cases these decisions will also include some kind of cost-benefit analysis. The current political climate in the United States may encourage more extensive use of risk analysis in the establishment of future regulations. 

Discuss the extent to which cost-benefit analysis should be considered in setting emission standards. 

VI A - Value Impact Analysis, a form of cost benefit analysis that includes attribute evaluations in addition to dollars. 

In a cost-benefit analysis (CBA), the cost of a remedial measure is weighed against the environmental benefits it creates. Is it worth investing in a new scrubber for a plant if the impacts on its surroundings decrease by 10%. ... 

The major difference between an OSHA-mandated investigation and other RCFA is that an appropriate corrective action or actions must be implemented as quickly as possible. In the non-OSHA-mandated RCFA process, a corrective action may or may not be implemented, depending on the results of the cost-benefit analysis. 

The cost of corrective actions is not a consideration in the OS HA regulations, but it must be considered as part of the analysis. Because of the critical timeline that governs an OSHA-mandated investigation, a full cost-benefit analysis may not be possible. However, the investigating... 

The comparison between these components can be done using different methods (e.g., Murray and Evans 2003 Edejer et al. 2003 Muenning 2002 Drummond et al. 2004). First, all inputs and results can be expressed in monetary terms, that is, outputs, outcomes, and impacts are transformed to currency units and compared with the costs (difference or quotient). This cost-benefit analysis is rarely done in... 

Cost-benefit analysis (CBA) is unique among economic evaluations in that it addresses the extent to which a particular course of action, such as a drug treatment or a hospital admission, is economically or socially worth while in the broadest sense. A CBA measures... 

Ginsberg G, Shani S, Lev B (1998). Cost-benefit analysis of risperidone and clozapine in the treatment of schizophrenia in Israel. Pharmacoeconomics 13,231—41. 

Le Pen C, Levy E, Ravily J, et al (1994). The cost of treatment dropout in depression. A cost-benefit analysis of fluoxetine vs tricyclics. /... 

Shah and Jenkins (2000) in a review of mental health economic studies from around the world identified 40 cost-of-illness studies, of which five covered all disorders, one neuroses, two panic disorders and one anxiety. All were from developed countries. There were numerous cost-effectiveness studies but none involving the anxiety disorders specifically. One study in the UK examined the cost-benefit analysis of a controlled trial of nurse therapy for neurosis in primary care (Ginsberg et al, 1984). 

Cost-benefit analysis uses monetary valuations of the morbidity and mortality consequences of diseases or interventions. This allows estimation of the absolute and relative net social benefit of intervention, calculated as the monetary value of the consequences of an intervention minus the direct costs. Any health or social care intervention with a net social benefit greater than zero (i.e. the benefits are greater than the costs) is worth undertaking. Two approaches have typically been used to value outcomes in monetary values. The first is the human capital approach, where the monetary value of benefit represents the value of changes in the amount or type of work done or use of leisure time as... 

For acquisitions of instruments, cost-benefit analysis is usually only the first step. It is much more difficult to write a justification for an instrument based on project utilization. In some companies, it may be difficult to get an instrument unless one can go outside the company to get data to prove the benefits of an instrument. That scientific literature demonstrating the utility of an instrument on related compounds is not an acceptable substitute to data on the company s compound can be distressing it can be difficult to get the necessary permissions to take a sample out of the company to a university or to an instrumental applications laboratory, and it can be awkward to present data to a conference of senior managers who have little understanding of the science involved in the presentation. However, the present system often makes it incumbent on the laboratory director to do these things to get the instruments necessary to complete projects on time. 

Important outcome indicators to evaluate postintoxication and/or postwithdrawal treatment of substance abuse and dependence can be divided into three major groups decreased consumption of substances, decreased problems associated with substance use, and increased psychosocial functioning. Although it is less commonly employed, a quality-of-life scale can help determine how substance abuse/dependence treatment has affected your patients lives. If you are involved in the cost-justification of services, a cost-benefit analysis could also become important, although this is more often used at the administrative level,... 

In many cases, various risk-reduction alternatives will result in a tolerable level of risk. Cost-benefit analysis can be a useful tool in evaluating alternative approaches. Costs are generally straightforward and easy to estimate however, estimating benefits may be more difficult, requiring assumptions that allow all benefits to be expressed using a common basis, usually monetary. 

Cost-benefit analysis also requires a determination of the costs incurred from incident-related fatalities. Reduction in individual risk (fatalities per year) is a key component in risk associated with buildings in process plants. One method of determining the cost of fatal accidents is to estimate the amount of money that society might perceive as reasonable compensation in the event of a fatal accident. 

Illustrative Cost-Benefit Analysis of Flame Retardants in Furniture. 131... 

Some cost-benefit analysis (CB A) performed on climate change reach an optimal level of C02 concentration in the atmosphere of 650-700 parts per million (ppm) within a century or two (Weitzman 2009). Furthermore, the whole concept of assigning monetary values to the above mentioned is for many persons morally upsetting. 

In order to associate a number to represent the utility of these four outcomes we have to choose between several types of economic evaluations, basically between cost-effectiveness analysis, cost-utility analysis and cost-benefit analysis. The first of these is ruled out because it measures the health outcome in natural units. Given that the side effects of drags are of a varied nature, we need to be able to aggregate the different seriousness of these side effects in order to obtain a single utility, at least for the NSEA event. Furthermore, this utility must be comparable with that of, for example, the SER event. This is not possible with cost-effectivity. If we chose cost-utility, the utility associated with each event would be measured in QALYs gained or lost in each option. As QALYs are a universal measure of health benefit, cost-utility analysis could be appropriate for this type of decision. Lastly, cost-benefit analysis would also be appropriate, as it measures the utilities associated with each outcome in monetary terms, which reflect the willingness to pay for one of the outcomes in terms of safety and effectiveness. 

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