Cost-Effectiveness Analysis and Decision Making

2 by 2 Contingency Table

A table used to analyze the relationship between two categorical variables

Discounting

A technique used to adjust future costs and outcomes to their present value

Dominated Alternatives

Alternative options that are inferior to other options in terms of both cost and effect

Sensitivity Analysis

An analysis that examines the impact of varying assumptions or inputs on the results of a study

One-way Sensitivity Analysis

An analysis that varies one input at a time while keeping other inputs constant

Two-way Sensitivity Analysis

An analysis that varies two inputs simultaneously to examine their combined impact on the results

Balanced Decision Tree

A decision tree that has an equal number of branches following each chance node

Decision Tree

A graphical representation of a decision-making process that considers different possible outcomes and their probabilities

Survival Curve

A graphical representation of the probability of surviving for a certain length of time

Bay's Theorem

A mathematical formula that calculates the probability of an event based on prior knowledge and new evidence

Utility

A measure of the quality of life or satisfaction derived from a particular health state

Standard Gamble

A method to estimate utility by asking individuals to make choices between different health states

Visual Analog Scale

A method to estimate utility by asking individuals to rate their health state on a scale

Time Tradeoff

A method to estimate utility by asking individuals to trade off time in a particular health state

Comparator

A reference case or alternative therapy used for comparison in health economics studies

Discrete Event Simulation

A simulation technique that models the operation of a system as a sequence of events

Monte Carlo Method

A simulation technique that uses random sampling to model uncertainty in a system

Markov Process

A stochastic model that represents a system with a finite number of states and probabilistic transitions between states

ICER

Incremental Cost-Effectiveness Ratio, a measure of the additional cost required to achieve an additional unit of effect

QALYs

Quality Adjusted Life Years, a measure of the quantity and quality of life lived

ROC Curve

Receiver Operating Characteristic Curve, a graphical plot that illustrates the performance of a binary classifier

Sensitivity

The ability of a test to correctly identify individuals with a particular condition

Specificity

The ability of a test to correctly identify individuals without a particular condition

Cost

The amount of money required to produce or obtain something

Probability

The likelihood of an event occurring

Negative Predictive Value

The probability that a negative test result indicates the absence of a particular condition

Positive Predictive Value

The probability that a positive test result indicates the presence of a particular condition

Prevalence

The proportion of a population that has a particular condition or characteristic prev = (TP + FN) / Total (a marginal probability)

Effect

The result or consequence of an action or event