Healthcare resources are scarce, and policy makers and health planners make choices between alternative uses of resources. Economic evaluation is important when allocating scarce resources. Cost-benefit analysis, cost effectiveness analysis, and cost utility analysis are decision-making tools that help policy makers and planners examine healthcare costs and the consequences of alternative health programs, services, and interventions.

• Define economic evaluation, and explain why it is important in healthcare.
• Discuss cost effectiveness analysis.
• Discuss cost-benefit analysis.
• Share your views on the application of the two approaches in resource allocation.