Health Economics

Health economics is concerned with the efficient and equitable allocation of resources in the context of scarcity and uncertainty, and is relevant to individuals, practitioners, governments and markets. Changing factors such as an aging population and new technologies becoming available are increasing expectations from people as a whole throughout the world, and decision makers must make rational choices to maximise benefits to population health whilst working with limited resources. 2 summarises this by asserting that "health care resources in every setting are always constrained, while unlimited demand is observed". The 'best' choices in the context of economics are the ones which maximise utility (individual satisfaction through consumption of goods) and welfare, the sum utility experienced by all individuals in society. Decision makers often have to seek satisfactory rather than optimal solutions, also known as working with 'bounded rationality' (simon in 3), as it is important to pursue both efficiency and equity in the funding of health care. Therefore, it may be unsuitable to fund the most cost effective option if it sacrifices the equal distribution of benefits. Research in health economics can take a normative or positive approach and this reflects the balance needed between cost effectiveness and equity when making economic decisions. Positive economic research and analysis is concerned with 'how things are' (1) and seeks to explain economic phenomena, whilst normative economic research and analysis is concerned with 'how things ought to be' and relies on value judgements of individuals (1). Downie in 3 describes positive economic research as knowledge generation, in which the costs and benefits of various options are de...

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...budgets, equity, and social solidarity (2). This raises issues for the common use of economic evaluation in decision making and in practice, committees are likely to focus on how as opposed to whether new treatments should be introduced (3), though little extensive evaluation and summary of research into economic evaluations in decision making appears to have been completed (3).

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accessibility/acceptability

Economic evaluation faces some difficulty in being implemented into current practice which can largely be divided into issues about accessibility and acceptability. Accessibility of research is reportedly poor, with difficulty noted in Sweden in identifying relevant studies and interpreting results (2), and when health economics information is available it is largely provided by the pharmaceutical industry (3) and therefore potentially biased.