 Cost-effectiveness analysis

Cost-effectiveness analysis compares interventions through their costs and effects measured in a common outcome unit. Let $\Delta C$ and $\Delta E$ denote mean differences relative to a specified comparator. A positive effect increment with nonpositive cost increment gives dominance; the reverse signs give a dominated intervention. A tradeoff in the positive-positive quadrant requires a willingness-to-pay threshold per outcome unit. Randomized controlled trials can estimate these differences, but their joint sampling distribution is needed to express uncertainty. Outcome units, time horizon and costing perspective must be specified; a survival-day increment is not automatically a quality-adjusted outcome.