Orthogonal Design
An experimental design for a choice experiment in which attribute levels are varied independently, so each attribute's effect on preference can be separated statistically.
Encyclopaedia
Explore comprehensive, evidence-informed explanations of key health economics concepts, including their development, application and relationships to other concepts. Published entries are validated through human expert review.
Output Maximisation
An objective in production theory of achieving the greatest possible output from a given set of inputs.
Paired Comparison
A health state valuation method in which respondents are shown two states at a time and indicate which they prefer, building up a ranking.
Pairwise Comparison
A comparison of exactly two interventions at a time, used as a building block within a fully incremental analysis of several options.
Pareto Efficiency
A state of resource allocation in which no individual can be made better off without making at least one other individual worse off.
Pareto Frontier
The set of allocations or outcomes for which no alternative exists that would improve one party's position without worsening another's.
Pareto Improvement
A change in resource allocation that makes at least one individual better off without making any other individual worse off.
Part-Worth Utility
The contribution of a single attribute level to an individual's overall utility for a good, estimated from a conjoint or choice experiment.
Partial Economic Evaluation
A study examining either the costs or the outcomes of an intervention, or both without comparison to an alternative, short of a full economic evaluation.
Payback Period
The length of time required for the cumulative cash inflows from an investment to equal its initial cost.
Perspective
The viewpoint adopted in an economic evaluation that determines which categories of cost and outcome are included, such as payer, patient, or societal.
Pooling Equilibrium
A market outcome in which different risk types make the same choice, so a firm cannot distinguish between them from behaviour alone.
Positive Externality
A benefit conferred on a third party by an economic activity, not reflected in its market price, leading to underproduction relative to the social optimum.
Preference Weight
A numerical value reflecting the relative desirability a population or individual assigns to a particular health state or outcome.
Present Value
The current worth of a future sum of money or cash flow stream, found by discounting each future amount using a specified discount rate.
Price Elasticity of Demand
A measure of how responsive quantity demanded is to a price change, calculated as percentage change in quantity over percentage change in price.
Price Elasticity of Healthcare
An empirical estimate of how sensitive healthcare use is to changes in out-of-pocket price, most famously quantified by a large randomised experiment.
Principal Agent Model
A formal framework analysing situations where a principal delegates decisions to an agent whose interests may not fully align with their own.
Principal-Agent Problem
The difficulty arising when an agent's actions cannot be fully observed by the principal, creating an incentive for the agent to serve their own interest.
Principal-Agent Problem in Healthcare
The specific version of the principal-agent problem in the physician-patient relationship, where clinical expertise gaps create both helpful guidance and risk of distorted recommendations.