A Conjoint Analysis Approach
Published online by Cambridge University Press: 25 May 2001
Current health economic literature does not provide clear guidelines on how uncertainty around cost-effectiveness estimates should be incorporated into economic decision models. Bayesian analysis is a promising alternative to classical statistics for incorporating uncertainty in economic analysis. Estimating a loss function that relates outcomes to societal welfare is a key component of Bayesian decision analysis. Health economists commonly compute the loss function based on the quality-adjusted life-years associated with each outcome. However, if welfare economics is adopted as the theoretical foundation of the analysis, a loss function based in cost-benefit analysis (CBA) may be more appropriate. CBA has not found wide use in health economics due to practical issues associated with estimating such a loss function. In this paper, we present a method based in conjoint analysis for estimating the CBA loss function that can be applied in practice. We illustrate the use of the methodology using data from a pilot study.