Suppose Jay has been experiencing back pain, and has four options for treatment (Table 14.6). a. Plot
Question:
Suppose Jay has been experiencing back pain, and has four options for treatment (Table 14.6).
a. Plot these four treatments on cost–pain reduction axes. Create a cost-effectiveness frontier by connecting potentially cost-effective treatments.
b. Calculate the ICER between cortisone injections and a chair cushion, and between acupuncture and cortisone injections.
c. Assume that indifference curves in this space are linear. Interpret this assumption.
d. Find the range of valuations for a pain reduction unit that Jay would need in order to pick cortisone injections as the cost-effective treatment. Explain your answer.
e. Under this assumption of linearity, is it possible to draw indifference curves such that cortisone injections will be cost-effective?
f. Relaxing this assumption, draw an indifference curve such that cortisone injections are preferred to all other treatments. Describe the preferences that your indifference curves imply.
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