Our objective was to determine the probability threshold for recurrent symptoms at which elective cholecystectomy compared to observation in older patients with symptomatic cholelithiasis is the more effective and cost-effective option. We built a decision model of elective cholecystectomy versus observation in patients >65 presenting with initial episodes of symptomatic cholelithiasis that did not require initial hospitalization or cholecystectomy. Probabilities for subsequent hospitalization, emergency cholecystectomy, and perioperative complications were based on previously published probabilities from a 5 % national sample of Medicare patients. Costs were estimated from Medicare reimbursements and from the Healthcare Cost and Utilization Project. Utilities (quality-adjusted life years, QALYs) were obtained from established literature estimates. Elective cholecystectomy compared to observation in all patients was associated with lower effectiveness (-0.10 QALYs) and had an increased cost of $3,422.83 per patient at 2-year follow-up. Elective cholecystectomy became the more effective option when the likelihood for continued symptoms exceeded 45.3 %. Elective cholecystectomy was both more effective and less costly when the probability for continued symptoms exceeded 82.7 %. An individualized shared decision-making strategy based on these data can increase elective cholecystectomy rates in patients at high risk for recurrent symptoms and minimize unnecessary cholecystectomy for patients unlikely to benefit.