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Table 5 CBA components that have relatively good agreement, poor agreement and flexibility in application

From: A cost–benefit analysis framework for preventive health interventions to aid decision-making in Australian governments

CBA component Areas of agreement Areas of disagreement Areas of flexibility
When to conduct a CBA Commensurate with the scale of investment
Required for investments over A$ 10 million
CBA not recommended for primary analysis by PBAC Type of analysis that is appropriate for investments less than A$ 10 million
Perspective and referent group Societal perspective for CBA The referent group or standing varies from communities within LGAs, the state jurisdiction and whole of Australia
Health perspective recommended by PBAC using CUA
Comparator/base case Well-defined status quo. Avoidance of “straw man” comparator Terminology (base case versus comparator)  
Options for appraisal A range of realistic options should be included The number of options included The nature of options included
Time horizon Principle that the time horizon should be the economic life of the project
Longer time horizons are associated with increased uncertainty
Appropriate time horizons for various interventions  
Social discount rate   Theoretical basis for social discount rate
The rate to be used in primary and sensitivity analyses
Costs and benefits Second-round impacts excluded in primary analyses The appropriate value for the VSL and VSLY Technique for estimating non-market impacts
Inclusion of productivity impacts
Decision rules NPV and BCR should be reported The preferred outcome measure (NPV or BCR) when these measures give varied results  
Sensitivity analyses Extensive uncertainty analysis should be undertaken to test the impact of key assumptions and variables Terminology (uncertainty analysis, risk analysis, sensitivity analysis) Type of analyses: one-way, scenario, best/worst-case, Monte-Carlo simulations
Distributional impacts and other considerations Distributional impacts should not be incorporated into technical results
Distributional impacts should be considered by decision-makers
  Method of undertaking distributional analysis
Reporting All critical assumptions and input parameters should be documented with supporting evidence Reporting standardized but varied across guidelines  
  1. A$ Australian dollars, BCR benefit–cost ratio, CBA cost–benefit analysis, CUA cost-utility analysis, LGA local government area, NPV net present value, NSW New South Wales, PBAC Pharmaceutical Benefits Advisory Committee, VSL value of a statistical life, VSLY value of a statistical life-year