Assessing costs and benefits of whole-of-government prevention

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Development of a cost-benefit analysis framework integrating inter-sectoral benefits of prevention

Project title

What is the issue?

Changing the social and environmental factors (upstream factors) that lead to poor health requires political support, whole-of-government collaboration and coordinated action across several government sectors.

Efforts to improve a population’s diet and physical activity levels to prevent obesity require a focus on systemic and environmental factors and coordinated action across several settings, including schools, workplaces and government sectors, such as agriculture, food, finance, urban planning and transport.

Decision-makers who want to use this whole-of-government approach to tackle the obesity epidemic may find it useful to have data about the effectiveness of different interventions as well as information about the economic credentials of possible options.

Economic evaluations allow decision-makers to make an informed judgment about the value for money of different interventions based on the incremental cost of implementing the intervention relative to the foregone benefit of maintaining the status quo.

Economic tools to inform decisions that have inter-sectoral impacts are not well developed or broadly used.

How did the project address the issue?

Decision-makers who want to use a whole-of-government approach when allocating resources need to be able to compare policies within and across sectors. Traditional health economic evaluations used in Australia express benefits only in health outcomes.

Cost-benefit analysis (CBA) considers both the costs and benefits of proposed policy action in monetary terms. It is also the only economic evaluation tool that allows comparisons between sectors, so it is best placed to inform whole-of-government decision-making on spending priorities.

However, different government sectors use different CBA methodologies and conventions, making it difficult to make valid comparisons between policies. The aim of this research is to establish an acceptable CBA framework that outlines a reference case for the evaluation of prevention interventions with a focus on obesity prevention.

The research involved:

  • A literature review of CBA guidelines and conventions in different government sectors in Australia
  • A literature review of different methods of valuing health effects in CBA
  • Interviews with economists and decision-makers from different government sectors.

What were the outcomes?

We developed a cost-benefit analysis framework.

What was the relevance for policy and practice?

The framework has been shared with NSW Treasury and NSW Health for internal use. Several of the NSW government representatives are interested in being kept informed about any further work on cost-benefit analysis, and also have been interested in co-authoring the publications.

Resources

Other resources

Presentations

  • Focus group with nine representatives from NSW Health (Centre for Population Health, Office of Preventive Health, Centre for Epidemiology and Evidence, Cancer Institute NSW, Health Infrastructure, Department of Premier and Cabinet).
  • Four interviews with NSW Treasury (Economic Analysis and Evaluation, Agency Budget and Policy, Commissioning and Contestability, Fiscal Estimates and Financial Reporting).

Funding

This project was funded by the NHMRC, Australian Government Department of Health, NSW Ministry of Health, ACT Health and the HCF Research Foundation.