Healthcare resources are scarce, and policymakers 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 policymakers and planners examine healthcare costs and the consequences of alternative health programs, services, and interventions.

Prepare at least a 5-page overview of cost-effectiveness analysis and cost–benefit analysis as decision-making tools in the allocation of health resources. Address the following:

• 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.