ERIC Number: ED351341
Record Type: RIE
Publication Date: 1984-May
Cost-Effectiveness and Cost-Benefit Analysis: Confronting the Problem of Choice.
Cost-effectiveness analysis and cost-benefit analysis are two related yet distinct methods to help decision makers choose the best course of action from among competing alternatives. For both types of analysis, costs are computed similarly. Costs may be reduced to present value amounts for multi-year programs, and parameters may be altered to show differing cost results. Effectiveness is typically an indirect constructed measure of selected program outcomes. For the same unit cost, one can determine which option yields the most effectiveness, or which program produces a given level at the lowest cost. Benefits are program outcomes expressed as money. Benefits are not necessarily recorded by the accounting system of the institution sponsoring the program. For either types of analysis, the rules for evaluating and deciding are essentially the same. The first step in any cost analysis is to determine the cost-center of analysis (the agency, department, programs, sets of programs, or program elements). The constant yardstick in effectiveness analysis is the desired outcome, but in benefits analysis, the constant yardstick is monetary value. Neither method is a panacea, but both are helpful in decision making. Six figures are included. Appendix 1 presents a cost categorization format. (SLD)
Publication Type: Reports - Evaluative
Education Level: N/A
Authoring Institution: N/A