Use the information below to answer the following questions.

Cost Effectiveness

Current Treatment $100,000 4 life-years gained

New Treatment $250,000 10 life-years gained

1. Calculate the ICER for the new treatment, assuming that the new treatment is being considered to replace the old one.

= ICER

= ($250,000 - $100,000)/(10 - 4)

= $25,000 per additional life year gained.

1. In what quadrant is the ICER located in Figure 3-4 (of the textbook or slide 47 of the Chapter 3 ppt)? Is further cost effectiveness analysis required to decide on treatment adoption?

ICER located in Quadrant I; yes. cost effectiveness analysis is relevant

1. How does the answer to b) change if the cost of the new treatment equals $75,000?

The ICER is located in quadrant IV because the new treatment dominates.

THE QUESTION BELOW I NEED HELP WITH.

What are meant by the third variable problem and reverse causation?

b) Apply these concepts to the observed statistical associations between years of education and better health. Give your opinion and reasoning as to whether this is causation or correlation.