3. Cost–Effectiveness Analysis

Cost-effectiveness ratio: The cost of an intervention divided by the resulting change in health status. The choice of currency units for measuring costs and the health units for measuring impact may vary. Wherever possible, DCP2 reports U.S. dollars per DALY.

Average cost-effectiveness: The total cost of addressing a particular health problem using a particular intervention divided by the total health gain.

Incremental cost-effectiveness: The additional cost of extending a particular intervention divided by the additional health gain that would result.

DALY: A unit for measuring the amount of health lost because of a particular disease or injury. It is calculated as the present value of the future years of disability-free life that are lost as the result of the premature deaths or cases of disability occurring in a particular year.

Discount rate: A rate that is used to convert future costs and benefits into equivalent present values. For example, at a 3 percent discount rate, a cost of US$1 next year would be equivalent to US$0.97 today and a cost of US$1 in 10 years time would be equivalent to US$0.74 today.

Intervention: An activity using human, physical, and financial resources in a deliberate attempt to improve health by reducing the risk, duration, or severity of a health problem (Jamison 2002, table 2).

Quality-adjusted life year: A unit for measuring the health gain of an intervention calculated as the number of years of life saved and adjusted for quality.

Years of life lost: A measure of the impact of an adverse health event, generally calculated by subtracting the age at which death occurs from life expectancy at that age.