There are several types of economic evaluation methods, including cost-efficiency, cost-effectiveness, cost-utility, and benefit-cost analyses. These analyses all use the results of costing analyses and can be used to identify priority interventions or activities, as well as inform the budgeting and planning processes. It is helpful to understand the different types of economic evaluation, and what questions they help to answer, to determine which is the most appropriate to use for a costing activity.

Different types of economic evaluation

There are four types of economic evaluation. These are:

It is important to remember that costs will also vary along different dimensions. When conducting a costing exercise, it is crucial to consider each of the following dimensions:

• Cost-efficiency analysis combines cost data with program data.
• Example: Cost per modern user or per couple years of protection (CYP)
• Cost-effectiveness analysis (CEA) combines cost data with a different outcome variable in the denominator that is often modeled
Example: Cost per unintended pregnancy averted
• Cost-utility analysis (CUA) adjusts for quality of life by translating modeled outcomes into disability-adjusted life years (DALYs) averted
• Example: Cost per DALY averted
• Benefit-cost analysis (BCA) monetizes benefits in the numerator and combines this with costs in the denominator
• Example: A benefit/cost ratio

Additionally, there are two related terms that are often used in economic evaluation that are important to understand:

• Incremental Cost-Effectiveness Ratio (ICER) is the incremental cost of the intervention divided by the incremental effect of the intervention
• Return on Investment (ROI) is the net return (benefits - costs) of an intervention divided by the cost of the intervention

While there are different types of economic evaluations, the steps to conduct an evaluation are essentially the same:

Since economic evaluations combine impact and cost data, an impact evaluation is ideally done at the same time as a costing study. This allows the cost and impact data to have similar characteristics, such as time period, location, population, etc.

The next module, Real World Applications of Costing and Family Planning, will discuss current applications of cost data for family planning programs.

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