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How do analysts compare return on investment for public health interventions?
How do analysts compare return on investment for public health interventions?
Ian Ross avatar
Written by Ian Ross
Updated over a week ago

Advocating for more funding for hygiene can be supported by clear communication of the return on investment from hygiene programmes. Two types of studies can be used to make this case: cost-benefit analysis (CBA) and cost-effectiveness analysis (CEA). These analyses can be used to advocate for more funding for hygiene, or to compare alternative hygiene programme options and designs. Both require more attention and focus on measuring costs, on the one hand, and programme outcomes, on the other.

Cost-benefit analysis: This approach combines all the benefits or consequences of a programme (e.g. saved time, disease reduction) and assigns “value” to them in monetary terms (e.g. US dollars or other currency). Commonly-used methods exist for putting such a monetary value on lives saved (mortality risk reduction), disease averted (morbidity), and avoided healthcare costs. In CBA, monetised benefits are then compared to the cost of an intervention, and a ‘benefit-cost ratio’ is calculated. This ratio can be thought of as what you get back if you invest $1 in the programme. If the ratio is greater than 1, the intervention delivers more benefits than costs and is economically beneficial; such a conclusion can help provide a reason to invest in it. In this way, CBA can be useful in advocating for more funding for hygiene, when benefits clearly exceed costs. In addition, the benefit-cost ratios of different types of intervention options can be compared, allowing decision-makers to determine which of the options is most efficient, although other factors should be taken into consideration, such as equity, the relative size of net benefits, and the number of beneficiaries reached. One reason for choosing CBA is that it is appealing to many decision-makers, especially in planning departments of governments, including the Ministry of Finance. It is the most common method of economic analysis outside the health sector.

Cost-effectiveness analysis: This approach compares the health benefit that can be achieved by an intervention (e.g. cases of diarrhoea averted or number of deaths averted) to its cost. CEA does not monetise this health benefit into a currency measure, but rather compares interventions based only on their relative cost in achieving a specific measure of health gain. Examples of health indicators that are used to compare interventions include the ‘cost per case of diarrhoea averted’ and ‘cost per death averted’. Some CEA studies use a combined measure of morbidity and mortality– the “disability-adjusted life year” (DALY). Importantly, CEA at the level of health outcomes is only used in the health sector (though different cost-effectiveness calculations can be constructed in other sectors, e.g. cost per tonne of CO2 mitigated). Hygiene-specific metrics at the level of outputs can be useful, such as ‘cost per additional person washing their hands’, though strictly speaking this is a cost metric rather than cost-effectiveness. The results of CEA on their own (without comparison to other interventions) are intuitively less useful than CBA for advocating for more funding for a sector in general. However, they are important for allocating funds efficiently within a sector.

Both CBA and CEA analyses can be used to compare hygiene interventions. Which one is deemed most valuable, for either planning of interventions or advocacy, will ultimately depend on the audience. CEA might have more traction with the Ministry of Health, for example, or within an organisation that is dedicated to hygiene programming but trying to choose among different designs. Other sectors or Ministries of Finance will likely find CBA more useful since it allows for more general comparisons.

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Editor's Note

Author: Ian Ross
Review: Marc Jeuland, Guy Hutton, Robin Lloyd
Last Update: 15.12.2020

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