Abstract
Economic modelling is increasingly being used to evaluate the cost effectiveness of health technologies. One of the requirements for good practice in modelling is appropriate application of rates and probabilities. In spite of previous descriptions of appropriate use of rates and probabilities, confusions persist beyond a simple understanding of their definitions. The objective of this article is to provide a concise guide to understanding the issues surrounding the use of rates and probabilities reported in the literature in economic models, and an understanding of when and how to transform them appropriately. The article begins by defining rates and probabilities and shows the essential difference between the two measures. Appropriate conversions between rates and probabilities are discussed, and simple examples are provided to illustrate the techniques and pitfalls. How the transformed rates and probabilities may be used in economic models is then described and some recommendations are suggested.
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The authors have no conflicts of interest that are relevant to this review. No sources of funding were used in the preparation of this paper.
The authors wish to acknowledge Sonja Sorensen from UBC and Dr Nicky Welton from the University of Bristol for their helpful comments on this manuscript. Any errors remain the responsibility of the authors.
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Fleurence, R.L., Hollenbeak, C.S. Rates and Probabilities in Economic Modelling. Pharmacoeconomics 25, 3–6 (2007). https://doi.org/10.2165/00019053-200725010-00002
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DOI: https://doi.org/10.2165/00019053-200725010-00002