Economic evaluation of the social determinants of health - An overview of conceptual and practical issues

This report develops a framework for the economic evaluation of social determinants of health (SDH) interventions. The use of economic arguments, in particular regarding the “value for money” of suggested interventions, has so far been a low priority in recent major SDH initiatives, such as in the WHO Commission on Social Determinants of Health. At the same time, the need to add an economic perspective to the analysis of SDH and of health inequalities has been increasingly recognized in the public health community.

Because any economic evaluation hinges on the evidence of effectiveness in the first place, a considerable share of our discussion focuses on the challenge of assessing whether a given intervention “works” (and if so, for whom it does). We stress the importance of using a research design that provides credible estimates of the causal impacts of the intervention under consideration, even in the absence of randomised experimental evidence. The approaches we propose, using quasi-experimental, econometric or structural models, can be used to provide credible estimates of the effectiveness of SDH interventions. In a framework for economic evaluation, the choice between these methods will usually depend on the existing research base and the practicality of new research on the causal impacts of the SDH intervention being evaluated.

For the purpose of valuing the health improvements and indeed other non-health effects possibly resulting from SDH interventions, we recommend social cost-benefit analysis as the approach to develop a comprehensive measure that reflects the value of improving outcomes across multiple domains including health, earnings, and crime. We focus on the application of cost-benefit approaches to economic evaluations of SDH interventions.

Last not least we discuss the implications of SDH interventions for health equity, and how distributional consequences might be taken into account in an economic evaluation. While there is growing acceptance among economists for the need to capture and take into account distributional consequences along-side economic evaluations, and while we also know that people are in principle willing to sacrifice overall health benefits for a reduction in health inequalities, a universally accepted method to incorporate the value of reducing health inequities into economic evaluations has yet to emerge. Instead, we may think of a hierarchy of approaches to incorporating equity considerations into economic evaluations of SDH interventions.