Measuring and illustrating statistical evidence in a cost-effectiveness analysis

Jeffrey S Hoch, Jeffrey D. Blume

Research output: Contribution to journalArticlepeer-review

16 Scopus citations


Recently, there has been much interest in using the cost-effectiveness acceptability curve (CEAC) to measure the statistical evidence of cost-effectiveness. The CEAC has two well established but fundamentally different interpretations: one frequentist and one Bayesian. As an alternative, we suggest characterizing the statistical evidence about cost-effectiveness using the likelihood function (the key element of both approaches). Its interpretation is neither dependent on the sample space nor on the prior distribution. Moreover, the probability of observing misleading evidence is low and controllable, so this approach is justifiable in the traditional sense of frequentist long-run behaviour. We propose a new graphic for displaying the evidence about cost-effectiveness and explore the strengths of likelihood methods using data from an economic evaluation of a Program in Assertive Community Treatment (PACT).

Original languageEnglish (US)
Pages (from-to)476-495
Number of pages20
JournalJournal of Health Economics
Issue number2
StatePublished - Mar 2008
Externally publishedYes


  • Cost-effectiveness analysis
  • Likelihood methods
  • Net benefit regression framework

ASJC Scopus subject areas

  • Health Policy
  • Public Health, Environmental and Occupational Health


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