10.9 Decision criteria

An intervention is dominating when the costs are lower, and the results are more effective. Similarly, an intervention is dominated if the costs are higher and the results are less effective than the comparators’ (Brousselle et al., 2011c; Bryan et al., 2017). A dilemma arises when an intervention is more costly than the alternative yet produces better effects. In this case, the discussion can switch from efficiency to affordability (Brousselle et al., 2011c). Health economists will also recommend using the Incremental Cost-Effectiveness Ratio (ICER) which is “the difference in expected costs between two interventions divided by the difference in expected outcomes” (Bryan et al., 2017, p. 55):

(Costs of A – Costs of B) / (Effects of A – Effects of B).

In Cost-Benefit analysis, the incremental benefits will be compared to differential costs, with the difference between the two being the net social benefit (Brousselle et al., 2011c; Drummond et al., 1998): Social benefits = (Benefits of A – Benefits of B) – (Costs of A – Costs of B).

Social Return on Investment (or Return on Investment) studies calculate a ratio of monetary benefits over costs for each intervention. The higher the ratio, the higher the return.

An increasing number of attempts can be observed to express the economic, social, and environmental impacts of interventions in monetary terms within ROI and Cost–Benefit analyses. For example, studies are attempting to calculate the net social benefits of reducing greenhouse gas emissions or, conversely, the net social costs of increasing greenhouse gas emissions (National Center for Environmental Economics, 2023). Where a market exists, environmental impacts will be estimated using market prices. For example: