The road to cost-effectiveness analysis.

the application of cost-benefit analysis to health care can be found in the work of Selma Mushkin (1958), work which is both in the mainstream of economics and in the vanguard of health economics. In cost-benefit analysis the mainstream has meant a preoccupation with the measurement (valuation) of economic benefits. As seen by economists, the essential tasks in measuring benefits are these: avoid duplication in counting benefits; distinguish between real and pecuniary benefits and include only the former; find a market price or obtain a shadow price (an imputed price or an adjusted market price) for each set of benefits; and obtain their present value by discounting. A close reading of Mushkin's early writings on cost-benefit analysis suggests what appears to be a small deviation from the economics mainstream. She tended to minimize the use of a discount rate, citing for illustration health programs that yield returns rather promptly and over a short interval of a year or two. Under these circumstances the discount rate is immaterial (Mushkin and Collings, 1959). I am unable to determine from Mushkin's early writings whether she intended to go further and do away altogether with the discount rate