If the initial use of amoxicillin fails to cure otitis media, a family will be burdened with medical costs for a second medication, additional office visit fees and time lost from employment. For some families the initial choice of a more expensive but more effective antibiotic may be more cost effective. Using a decision analysis approach we compared the cost effectiveness of amoxicillin and cefaclor. As the amoxicillin efficacy rate decreases or as parental salaries are increased, the cost-effective advantage moves towards cefaclor. With the decision analysis method described, a practitioner can use costs and efficacy rates relevant to his or her practice to determine the most cost-effective initial antibiotic for a child with otitis media.