Knowing “what works” in policy is important, but so is knowing what policy alternatives cost. For instance, do the benefits of a certain program or intervention outweigh its costs? Or among two interventions designed to achieve the same goal (say, improving children’s reading ability), does one produce a given level of improvement at lower cost? Questions like these can be answered with cost-benefit analysis and cost-effectiveness analysis.
We get an overview of these topics from Henry Levin, one of the nation’s leading experts. He is a professor of economics and education at Teachers College at Columbia University and a professor emeritus at Stanford. He’s the co-author of the book Cost-Effectiveness Analysis: Methods and Applications.
Two key terms discussed in the interview are:
- Cost-benefit analysis, which typically compares the cost of a single program to the value of the outcomes it achieves for taxpayers. (One can also compare the costs and benefits of multiple similar programs, which is called portfolio analysis.)
- Cost-effectiveness analysis, which considers how much each program costs to achieve the same outcome.
Web extra: Henry Levin provides an example of how cost research helped catalyze policy change in New York City, using the example of CUNY Accelerated Study in Associate Programs (ASAP), designed to increase graduation rates among community college students. [click here]