Economic analysis is a process that helps to organize information and evaluate alternatives. It is often used to determine the best course of action for organizations that are attempting to maximize impact with limited resources. This can be applied to a variety of situations, from environmental regulation to building design.
In addition, economic analysis is often used as an attempt to evaluate the potential benefits of new or existing policies/programmes. However, it is important to be clear that these studies are not necessarily a full economic evaluation (ie, they may not include all externalities, and the ‘economic benefits’ reported are often an approximation/theoretical rather than directly realisable to a setting’s payers or society).
A common form of economic analysis is a cost-benefit analysis. This typically involves comparing the costs and consequences of interventions/policies in monetary terms. It is based on the welfarist approach and therefore may not take into account all preferences/values.
Another method of economic analysis is a cost-utility analysis which differs from a cost-effectiveness analysis in that it does not require assigning a monetary value to health benefits. This method also does not have to consider the ethical/equity issues that can arise from monetizing health benefits.
Finally, an emerging field of economic analysis uses big data machine learning techniques to discover and apply hitherto unknown sets of indicators. These are referred to as alternative data and it is important that efforts to protect privacy/confidentiality do not compromise this work (eg, statistical disclosure limitation or SDL). While this does reduce the amount of data available for economic analysis, new methods/models are being developed to compensate for these limitations.