I am a health economist. I often look at information on costs, which is generally assumed to come from a Gamma distribution because costs are constrained to be zero or positive. Typically this information is taken from the literature, where a point estimate is reported with a range around this estimate (a max and a min, say 50% larger, and 50% less than the point estimate).
I would like to calculate the standard error (se) value when I come across the mean and this range, as typically reported. The following post: https://math.stackexchange.com/questions/2873763/is-it-possible-to-determine-shape-and-scale-for-a-gamma-distribution-from-a-mean
se <- ((Maximum) - (Mean)) / 2 se
This post didn't provide the intuition for this approach, but I assume that because the central limit theorem states that the distribution of a sample mean will approach a normal distribution regardless of the population distribution, I can assume a normal distribution of the sample mean m such that the confidence interval is CI = m ± t
*SE. Thus, this formula can be solved for the SE: CIupper = m + t
*SE ---> SE = (CIupper-m)/t. While the t-quantile can be looked up for the level of confidence when the total sample size (n)/the number of coefficients in the model (k) are known, for large n (and 95% CI) the quantile approaches 2.0, which is why I assume the post suggests a division by 2.
(Above formula and rearrangement comes from a post by Jochen Wilhelm here: https://www.researchgate.net/post/Formula_for_calculate_Standard_errorSE_from_Confidence_IntervalCI)
To investigate this approach for calculating the standard error I use:
Goldstein, D. A., Chen, Q., Ayer, T., Howard, D. H., Lipscomb, J., Harvey, R. D., ... & Flowers, C. R. (2014). Cost effectiveness analysis of pharmacokinetically-guided 5-fluorouracil in FOLFOX chemotherapy for metastatic colorectal cancer. Clinical colorectal cancer, 13(4), 219-225. https://www.sciencedirect.com/science/article/abs/pii/S1533002814000978
In the attached Table they report the max, min and average cost values. Crucially, they report the gamma distribution shape and scale values for these cost parameters. This lets me test the standard error I create when following the above approach, by entering this into the methods of moments, along with the mean supplied in the paper, and determining if I get the same shape and scale values.
I can replicate almost all of their results as follows using the R programming language:
Maximum <- SOMEVALUEHERE Mean <- SOMEVALUEHERE se <- ((Maximum) - (Mean)) / 2 se mean <-Mean mean mn.cIntervention <- mean ## mean cost of intervention se.cIntervention <- se ## standard error of cost of intervention a.cIntervention <- (mn.cIntervention/se.cIntervention)^2 ## alpha value for cost of intervention (shape) b.cIntervention <- (se.cIntervention^2)/mn.cIntervention ## beta value for cost of intervention (scale) a.cIntervention b.cIntervention
Bar the first row, when I generate the standard error as per the above my resulting shape and scale values are identical to those reported by the author down to the decimal point, so I conclude my standard error is calculated appropriately.
For the first row they report:
Administration cost MEAN: 284.77 MIN: 177.70 MAX: 375.44 gamma(28.295, 10.064), whereas with the above method I get: gamma(39.45674, 7.217271).
Knowing that CI = m ± t
*SE, I assume that the formula can be solved for the SE: as CIupper = m + t
*SE ---> SE = (CIupper-m)/t, but also as CIlower = m - t
*SE ---> SE = (m-CIlower)/t.
Thus, I also assume that where the difference between the upper interval and the mean, and the lower interval and the mean wasn't symmetric, the authors checked which of what they call the max or the min (per attached Table) was further away, and chose to calculate the standard error using the lower interval (minimum) as SE = (m-CIlower)/t, because this was further away and thus incorporated more of the variability in the SE.
My questions is thus, is my approach to calculating a standard error for a gamma distribution correct where only the mean and a min/max range about this mean is reported?
Attached Table 4 as image, per comments: