Cost-benefit analysis

This function performs a cost-benefit analysis. It is assumed that the benefit is caused by the positive health impacts of a policy intervention, which generates some costs.

Usage

cba(
  output_attribute = NULL,
  impact_benefit = NULL,
  valuation,
  cost,
  discount_rate_benefit = NULL,
  discount_rate_cost = NULL,
  inflation_rate = NULL,
  discount_shape = "exponential",
  n_years_benefit = 1,
  n_years_cost = 1
)

Arguments

output_attribute: List produced by healthiar::attribute_health(), healthiar::attribute_lifetable() or healthiar::compare() as results.
impact_benefit: Numeric value referring to the positive health impact as result of a reduction of harmful exposure.
valuation: Numberic value referring to unit value of a health impact.
cost: Numeric value referring to the investment cost to achieve the reduction of exposure.
discount_rate_benefit, discount_rate_cost: Numeric value referring to the the discount rate used in the benefit and the cost side (respectively). Their values determine the approach of cost-benefit analysis: direct approach (if the same discount_rate is used for cost and benefit) and indirect approach (different discount rates).
inflation_rate: Numeric value between 0 and 1 referring to the annual inflation (increase of prices). Only to be entered if nominal (not real) discount rate is entered in the function. Default value = NULL (assuming no nominal discount rate).
discount_shape: String referring to the assumed equation for the discount factor. By default: "exponential". Otherwise: "hyperbolic_harvey_1986" or "hyperbolic_mazur_1987".
n_years_benefit, n_years_cost: Numeric value referring to number of years in the future to be considered in the benefit and cost side (respectively). Years for discounting and/or inflation. Be aware that the year 0 (without discounting/inflation, i.e. the present) is not be counted here. If a vector is entered in the argument impact, n_years does not need to be entered (length of impact = n_years + 1)

Value

This function returns a list containing:

1) cba_main (tibble) containing the main CBA results;

net_benefit (numeric column) containing the difference between benefit and cost (i.e. benefit - cost)
benefit (numeric column) containing discounted benefit (i.e. monetized attributable health impact)
cost (numeric column) containing discounted cost
And many more

2) cba_detailed (list) containing detailed (and interim) results.

benefit (list)
cost (tibble)

If the argument output_attribute was specified, then the two results elements are added to the existing output.

Details

Methodology

This function provides as output three types of cost-benefit indicators (Boardman et al. 2018) :

net benefit
cost-benefit ratio
return of investment

Detailed information about the methodology (including equations) is available in the package vignette. More specifically, see chapters:

References

Boardman AE, Greenberg DH, Vining AR, Weimer DL (2018). Cost-Benefit Analysis: Concepts and Practice, 5th edition. Cambridge University Press, Cambridge, UK. ISBN 978-1108401296.

Author

Alberto Castro & Axel Luyten

Examples

# Goal: performs a cost-benefit analysis using an existing output
# of a attribute_... function

output_attribute <- attribute_health(
  erf_shape = "log_linear",
  rr_central = 1.369,
  rr_increment = 10,
  exp_central = 8.85,
  cutoff_central = 5,
  bhd_central = 30747
)

results <- cba(
  output_attribute = output_attribute,
  valuation = 50000,
  cost = 100000000,
  discount_shape = "exponential",
  discount_rate_benefit = 0.03,
  discount_rate_cost = 0.03,
  n_years_benefit = 5,
  n_years_cost = 5
)

results$cba_main |>
  dplyr::select(benefit, cost, net_benefit)
#> # A tibble: 1 × 3
#>      benefit      cost net_benefit
#>        <dbl>     <dbl>       <dbl>
#> 1 151041153. 86260878.   64780274.