The time horizon used in an economic evaluation should be of sufficient length to capture all costs and effects relevant to the decision problem; an appropriate discount rate should be used to discount cost and effects to present value.
Importance for decision making
The time horizon is the period over which the costs and effects of the intervention and comparators are calculated. The time horizon used in an economic evaluation is important because any decision made at a point in time will have implications in terms of net intervention effects and resource use extending into the future. The economic evaluation should use a time horizon that is long enough to capture all costs and effects relevant to a decision problem.
When projecting costs and effects into the future, those costs and effects need to be discounted to reflect their value at the time the decision is being made. This ensures that the time preferences of the population affected by the decision are taken into account.
The nature of the interventions and comparators in the decision problem will largely define the appropriate time horizon. The time horizon will often be ‘lifetime’ – ie. the natural length of life of the population cohort in which the analysis is being undertaken. Confirming whether the length of the time horizon is sufficient can be achieved by monitoring the impact of time horizon changes.
It is never appropriate for the time horizon to be determined by the length of time over which evidence is available, as this would lead to incomplete information being made available to the decision-maker. Where data is not available to inform an appropriate time period, some projection of costs and effects into the future will be required.
There are divergent views of the appropriate discount rate to be used in economic evaluations. In addition, the Gates-RC will be used in economic evaluations to inform decisions across constituencies where there will be legitimate and often substantial differences in time preferences for health and wealth. However, to facilitate comparability economic evaluations adhering to the Gates-RC should use and annual discount rate of 3% for both costs and effects as a stated methodological specification.
Use of alternative discount rates is encouraged where appropriate to the decision problem and constituency. These should be presented clearly with justification for their use. In cases where the costs and effects are of particularly long duration (eg. a time horizon of more than 30 years into the future is used) the impact of lower discount rates should be explored in a sensitivity analysis.
Research related to the principle
Claxton K, Paulden M, Gravelle H, et al. (2010)
Discounting and decision making in the economic evaluation of health‐care technologies
Haghparast-Bidgoli H, Skordis J, Harris-Fry H, et al. (2019)
Protocol for the cost-consequence and equity impact analyses of a cluster randomised controlled trial comparing three variants of a nutrition-sensitive agricultural extension intervention to improve maternal and child dietary diversity and nutritional status in rural Odisha, India (UPAVAN trial)
Radin M, Jeuland M, Wang H, et al. (2019)
Benefit-Cost Analysis of Community-Led Total Sanitation: Incorporating Results from Recent Evaluations
Haghparast-Bidgoli H, Shaha S K, Kuddus A, et al. (2018)
Protocol of economic evaluation and equity impact analysis of mHealth and community groups for prevention and control of diabetes in rural Bangladesh in a three-arm cluster randomised controlled trial