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Politics of Sin - Cost Benefit Analysis (CBA)

Major policy changes


QALY measures how effective health-care interventions are from a CBA viewpoint. The higher the $/QALY, the less effective (more expensive) an intervention is. The break-even point at which a $/QALY becomes too expensive, in the UK is (officially) about £37,000/QALY. A QALY analysis for introducing regulations to ban cell-phones while driving costed it to about $300,000/QALY - which would make it far more of a cost than a benefit.

Effects of small policy changes

Will liberalising the law increase use?

Yes and no. It depends upon how far the law is liberalised.

For example, depenalization of cannabis users (aka "decriminalization") will have little immediate effect. There may be a long-term increase in cannabis use (due to less stigmatization and penal risk to users) but this may be counter-balanced by long-term decrease in use (due to social factors such as risk conciousness). Increased cannabis use may even have overall beneficial effects if it results in less boozing (there is some evidence to suggest that it will); because booze is a more dangerous drug. So cannabis legalization or depenalization could be a net benefit to health costs.