Accounting for institutional change in health economic evaluation: A program to tackle HIV/AIDS and gender violence in Southern Africa Stephen Jan a, * , Paul Pronyk b,c , Julia Kim b,d a The George Institute for International Health, P.O. Box M201, Missenden Road, Camperdown, NSW 2050, Australia b Rural AIDS and Development Action Research Programme, School of Public Health, University of Witwatersrand, Acornhoek, South Africa c Department of Infectious and Tropical Diseases, London School of Hygiene and Tropical Medicine, London, UK d Health Policy Unit, Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, London, UK Available online 26 December 2007 Abstract There has been growing interest in the application of institutionalist perspectives in the health economics literature. This paper investigates the institutionalist notion of social value and its use in economic evaluation with particular reference to a program to address HIV/AIDS and gender violence in Southern Africa (IMAGE). Institutions are the rules that govern the conduct between individuals, groups and organisations. Their social value stems from their capacity to reduce the uncertainty in human interactions thereby both reducing transaction costs and, importantly, enabling the initiation and sustainability of various activities (instrumental value). Furthermore, institutions tend to be formed around certain ethical positions and as a consequence, act in binding future de- cision making to these positions (intrinsic value). Incorporating such notions of social value within a conventional welfare-based measure of benefit is problematic as institutional development is not necessarily consistent with individual utility. An institution- alist approach allows for these additional domains to be factored into economic evaluation. IMAGE is an intervention to reduce gender violence and HIV through microfinance, health education and community devel- opment, and involves significant initial investment in institution-building activities, notably through training activities with pro- gram staff and community members. The key to employing an institutionalist approach to the evaluation of IMAGE is in understanding the nature of those actions that can be seen as institution-building and determining: (1) the instrumental value of follow-up activities by appropriate amortisation of transaction costs over an horizon that reflects the economies gained from the intervention; and (2) the intrinsic value of any transformation in the community through a cost-consequences approach informed by an a priori conceptual model. This case study highlights how health sector interventions can effect institutional changes and how these are captured within a theory-based economic evaluation framework. Ó 2007 Elsevier Ltd. All rights reserved. Keywords: Southern Africa; Institutionalism; Economic evaluation; Social welfare; Transaction costs; IMAGE; HIV/AIDS; Gender Introduction The development of health economics as a distinct sub-discipline of economics has been based in large * Corresponding author. E-mail addresses: sjan@george.org.au (S. Jan), pronyk@ agincourt.co.za (P. Pronyk), jkim@agincourt.co.za (J. Kim). 0277-9536/$ - see front matter Ó 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.socscimed.2007.11.010 Social Science & Medicine 66 (2008) 922e932 www.elsevier.com/locate/socscimed