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Adjusting to Changes in Health: Implications for Cost-Effectiveness Analysis
Journal of Health Economics (2004)
  • Rajiv Sharma, Portland State University
  • Miron Stano, Oakland University
  • Mitchell Haas, Western States Chiropractic College
This article introduces a model in which individuals incur adjustment costs associated with adaptations made following changes in their health. With adjustment costs, patients’ preferences for health states depend on their initial health in such a way that improvements have lower values than corresponding deteriorations. Improvement and deterioration must therefore be treated asymmetrically in CEA. The inclusion of adjustment costs also has other consequences. It produces a more stringent CEA criterion, and may affect the relative rankings of interventions. In addition, when health is multi-dimensional, and adjustment costs are incorporated, we show that a consensus on even ordinal rankings of health states becomes impossible.
Publication Date
March, 2004
Citation Information
Rajiv Sharma, Miron Stano and Mitchell Haas. "Adjusting to Changes in Health: Implications for Cost-Effectiveness Analysis" Journal of Health Economics Vol. 23 Iss. 2 (2004)
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