Happy birthday health economics, from public health!

Guest post from Cam Donaldson, Kenny Lawson, Helen Mason and Emma McIntosh

UK Health economics is 40 years old this year. Well, more accurately, the Health Economists’ Study Group is 40 years old. This is to be celebrated in itself – few areas of applied economics have been as successful in terms of sustainability and influence, as well as contributing significantly to our parent discipline of economics.

Ironically, health economics concepts can be traced back to Adam Smith’s pronouncements on public health:

“In some parts of Lancashire it is pretended, I have been told, that bread of oatmeal is a heartier food for labouring people than wheaten bread, and I have frequently heard the same doctrine held in Scotland. I am, however, somewhat doubtful of the truth of it. The common people of Scotland, who are fed with oatmeal, are in general neither so strong nor so handsome as the same rank of people in England, who are fed with wheaten bread. They neither work so well, nor look so well; and as there is not the same difference between people of fashion in the two countries, experience would seem to show that the food of the common people of Scotland is not so suitable to the human constitution as that of their neighbours of the same rank in England.”

We say ‘ironically’ because, despite the claimed successes of health economics and public health, growing health inequalities within nations remains an outstanding societal challenge, and one with significant health economic consequences. The main challenge, of course, is in devising effective and efficient interventions to reduce such inequalities. For health economics, the question then becomes one of whether our tools, which have been so successful to date, are up to the task of economic appraisal of public health interventions.

Indeed the dominant rubric of ‘cost per quality adjusted life year’ seems to present something of a moral dilemma for health economics when it comes to assessing public health interventions. The cost-per-QALY metric has served well the assessment of health technologies, but, amongst others, has the following limitation: all that is measured (and hence valued) are health gains for health care resources expended.

Public health economics: more than just cost-per-QALY?

On the cost side this is limiting, given that many public health interventions will, by their nature, be multi-sectoral, thus requiring more of a ‘societal approach’. Likewise, on the benefit side: although one may wish to assess the output of public health interventions in QALYs, what about other outcomes such as ‘improving life chances’ as well as enhancements in quality of housing and built environment, dignity, esteem and capabilities? Many community-based public health interventions also have spill over effects on their communities which need to be captured. The reductionism of the now-dominant health economics evaluation approach does not match what needs to be measured in evaluating public health. A broader and longer time horizon is required to fully capture all impacts.

This becomes a moral dilemma because, given that so many interventions previously evaluated by bodies such as NICE have been assessed using cost-per-QALY, should we permit others to be appraised via a broader societal approach which now takes these ‘other broader attributes’ into account?

There are two answers to this question. First, if the general scientific principle of working from ‘broad to specific’ were adhered to in health economics, no such moral dilemma would exist. We could start off our evaluations by thinking broadly and then either remain so or work to something more specific (e.g. cost per QALY) depending on the issue at hand. Just because health economics has come at this principle the wrong way round - specific to general - should that be allowed to limit our evaluations by leaving out the measurement of important potential impacts?

Secondly, and following on from this, a broader societal approach actually takes us back to the origins of economic evaluation, which was designed to:

“...identify relevant options for consideration; enumerate all costs and benefits to various relevant social groups; quantify as many as can be sensibly quantified; not assume the unquantified is unimportant; use discounting where relevant to derive present values; use sensitivity analysis to test the response of net benefits to changes in assumptions; and look at the distributive impact of the options”

So, public health has given health economics a birthday present - the opportunity to return to a societal perspective, which many, even in health economics itself, have been advocating for some time.

Hopefully, we can take advantage of this coming together of health economics and public health in measuring and valuing what is relevant and so implementing effective and efficient public health solutions to reduce health inequalities in the communities we all seek to serve.


Cam, Kenny, Helen and Emma run the Economics of Public Health blog, hosted by the Glasgow Centre for Population Health