Cost-Effectiveness Measurement in Development : Accounting for Local Costs and Noisy Impacts
As evidence from rigorous impact evaluations grows in development, there have been more calls to complement impact evaluation analysis with cost analysis, so that policy makers can make investment decisions based on costs as well as impacts. This p...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank Group, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/09/20196499/cost-effectiveness-measurement-development-accounting-local-costs-noisy-impacts-cost-effectiveness-measurement-development-accounting-local-costs-noisy-impacts http://hdl.handle.net/10986/20333 |
| Summary: | As evidence from rigorous impact
evaluations grows in development, there have been more calls
to complement impact evaluation analysis with cost analysis,
so that policy makers can make investment decisions based on
costs as well as impacts. This paper discusses important
considerations for implementing cost-effectiveness analysis
in the policy making process. The analysis is applied in the
context of education interventions, although the findings
generalize to other areas. First, the paper demonstrates a
systematic method for characterizing the sensitivity of
impact estimates. Second, the concept of context-specificity
is applied to cost measurement: program costs vary greatly
across contexts -- both within and across countries -- and
with program complexity. The paper shows how adapting a
single cost ingredient across settings dramatically shifts
cost-effectiveness measures. Third, the paper provides
evidence that interventions with fewer beneficiaries tend to
have higher per-beneficiary costs, resulting in potential
cost overestimates when extrapolating to large-scale
applications. At the same time, recall bias may result in
cost underestimates. The paper also discusses other
challenges in measuring and extrapolating cost-effectiveness
measures. For cost-effectiveness analysis to be useful,
policy makers will require detailed, comparable, and timely
cost reporting, as well as significant effort to ensure
costs are relevant to the local environment. |
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