Comparison of methods for assessing cost-effectiveness
| Cost-effectiveness analysis (CEA) | Cost-utility analysis subtype of CEA | Cost-benefit analysis (CBA) | Social return on investment (SROI) |
| Main objective | |||
| Compare costs and outcomes of alternatives within the same domain | Compare costs and outcome of alternatives within the same domain | Assess worthwhileness of the investment made in implementing an intervention | Assess worthwhileness of the investment made in implementing an intervention, from the perspective of stakeholders |
| Accounting for costs | |||
| Monetary value. Multiple sources can be explored, including direct and indirect costs as well as different perspectives | Monetary value Multiple sources can be explored, including direct and indirect costs as well as different points of view | Monetary value Multiple sources can be explored, including direct and indirect costs as well as different perspectives | Monetary value Multiple sources can be explored, including direct and indirect costs as well as different perspectives |
| Accounting for benefits | |||
| Benefits referred to as ‘effectiveness’, which is reported as ‘natural units’ such as life years gained. | Benefits referred to as ‘utility’, which is reported as quality adjusted life years gained/disability adjusted life years averted/healthy life years gained | Benefits include both health and non-health outcomes, which are reported as monetary value or welfare benefit. Benefits that are difficult to monetise are listed | Benefits include both health and non-health outcomes, including social, economic and environmental outcomes. Both positive and negative effects are accounted for. Benefits are reported as monetary value or welfare benefit, using financial proxies to show monetary value of benefits that cannot be easily monetised. |
| Level of application | |||
| Single intervention level | Single intervention level | Single or multiple intervention(s), project or programme level | Single or multiple intervention(s), project, programme, policy or organisation level |
| Time line of analysis | |||
| Retrospective or prospective | Retrospective or prospective | Retrospective or prospective | Retrospective (evaluative type) or prospective (forecast type) |
| Discounting of future value | |||
| Applicable | Applicable | Applicable | Applicable |
| Stakeholder engagement | |||
| Not required | Not required | Not required | Multiple stakeholders required |
| Theory of change | |||
| Not required for conduct | Not required for conduct | Not required for conduct | Required for conduct |
| Main output of analysis | |||
| Incremental cost-effectiveness ratio (ICER). Sensitivity analysis is applicable | ICER. Sensitivity analysis is applicable | Benefit-cost ratio (BCR), economic internal rate of return, net present value (NPV), break-even point. Sensitivity analysis is applicable | SROI ratio, NPV, payback period. Sensitivity analysis is applicable |
| Interpretation of main output of analysis | |||
| Intervention with higher cost-effectiveness ratio is better | Intervention with higher cost-effectiveness ratio is better | BCR >1 is worthwhile investment | SROI ratio >1 is worthwhile investment |
| Relevance | |||
| Priority setting and resource allocation | Priority setting and resource allocation | Priority setting and resource allocation | Priority setting, resource allocation, stakeholder relationship building, accountability framework and management tool |