Objectives: To provide an overview of alternative approaches to modelling in economic evaluation, and to highlight situations where each of the alternative modelling techniques should be employed.
Methods: A review of the available approaches to modelling in the economic evaluation of health care interventions with a leading discussion of examples of published studies leading to guidance in the selection of an appropriate approach in different circumstances.
Results: The main approaches to modelling used in economic evaluations in health care are decision trees, Markov models and individual sampling models. These methods assume independence of individuals within the model. Where interaction between individuals is important, other methods such as discrete-event simulation or system dynamics are preferable.
Conclusions: The paper highlights the crucial question to be answered when selecting the approach to modelling: can the individuals being simulated in the model be regarded as independent? This issue is very commonly not recognised by analysts but is fundamental to the appropriate application of modelling in economic evaluation.