Advancing the Power of Economic Evidence to Inform Investments in Children, Youth, and Families (2016) / Chapter Skim
Currently Skimming:
2 Setting the Stage
2 Setting the Stage
Pages 39-82
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From page 39... ...
It then identifies the stakeholders who produce and consume the economic evidence resulting from these evaluations, as well as those who serve as intermediaries in the economic evaluation process. The next two sections provide selected examples of the current uses of economic evidence to inform investments in children, youth, and families and highlight the challenges involved in these efforts, particularly with respect to the quality, usefulness, and use of the evidence.
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From page 40... ...
, and the potential cost, cost-effectiveness, or benefit-cost results can be calculated -- typically called a prospective or ex ante analysis. Ultimately, which economic evaluation method is most appropriate depends on the question being addressed and the information on costs and outcomes that is available; what is feasible also depends on the resources available to support the research.
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From page 41... ...
For all of these methods, this requires an estimate of the causal impact of the intervention on its intended outcome or outcomes. Issues involved in deriving such an estimate as an input to economic evaluation are reviewed in Chapter 3.
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a unit change in a given economic costs from a a given point in time in outcome outcome? societal perspective (may natural units • For a given outcome (or • What is the amount be disaggregated by • Optionally, the monetary outcomes in the same natural of a given outcome stakeholder)
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Benefit-Cost Analysis and Related Methods Benefit-cost (or • Does the economic • Comprehensive measure • Measures of the • Net benefits to society, cost-benefit) valueb to society of the of the intervention's intervention's impacts inclusive of all impactsa analysis (BCA or outcomes affected by economic costs to society at each point in time in • Ratio of benefits to costs CBA)
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From page 44... ...
, in the • Market prices or aggregate and for specific "shadow prices" of the budget components? value to the government sector of all outcomes Break-even • How great would • Comprehensive measure • Market prices or • Magnitude of impacts analysis the impacts of an of the intervention's "shadow prices" of the required on any one outcome intervention have to be economic costs to society value to society or to or combination of outcomes in order to break even, or to the stakeholder(s)
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From page 45... ...
BCA results can be particularly informative when the societal perspective is disaggregated to show these sub-perspectives. See the section in Chapter 3 on Defining the Scope for more discussion on this topic.
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From page 46... ...
and differentiated be tween total economic costs -- accounting for the value of all resources used -- and financial costs -- those resources used by the implementing organization, in this case the PROSPER system. As seen in the table below, the full economic costs, whether measured in the aggregate or per youth served, exceeded the financial costs by about 50 percent.
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From page 47... ...
Current guidance for the field in the conduct of cost-utility analysis was provided almost two decades ago by the consensus Panel on Cost-Effectiveness in Health and Medicine (Gold et al., 1996; Weinstein et al., 1996) and is currently being updated by the 2nd Panel on Cost-Effectiveness in Health and Medicine.4 Although medical and health-services interventions cover much that is beyond the scope of this report, QALYs and DALYs have been used for economic evaluation of social and behavioral interventions.
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The growing number of randomized controlled trial evaluations provides a basis for conducting economic evaluation; CEA in particular has been a useful approach for comparing the gains in key outcomes per dollar spent. For example, Dhaliwal and colleagues (2013)
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SETTING THE STAGE 49 Comparative Cost-Effectiveness Estimates for 12 Interventions Additional Years of Education per $100 Spent Lower Point Upper Intervention Model (Country) Bound Estimate Bound Information Session for Parents 1.0 20.6 40.2 on Returns to Education (Madagascar)
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This approach is particularly useful in the context of social interventions, which as noted above often affect multiple outcomes. As illustrated in the BCA example in Box 2-3, early childhood interventions, for example, may have effects on the child in terms of school readiness, health, or service utilization (e.g., emergency room visits)
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While the typical cost-savings analysis may entail calculating summary metrics such as a costsavings ratio, the primary objective of BIA is to present the net program impact, year by year, on the government budget. Finally, break-even analysis is an option when intervention outcomes 5 These special cases are sought frequently.
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Perry Preschool was a 1- or 2-year part-day center-based preschool program that served a small number of children with low income and low IQ scores in Ypsilanti, Michigan. The program was evaluated using a randomized controlled trial (RCT)
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From page 53... ...
Additional Principles and Values That Drive Investment Decisions "The most important factor that influences people in their decision making is their existing belief system." -- Jerry Croan, senior fellow, Third Sector Capital, in the committee's open session discussion on March 23, 2015. The economic evaluation methods summarized in Table 2-1 have the potential to play an important role in helping decision makers understand the economic value of the resources required to implement an intervention, the cost to achieve a given impact, or the economic value of outcomes from the intervention relative to the costs of implementation.
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Other Considerations The United States is a pluralistic society with diverse political views, cultural norms, and values. Evidence from economic evaluations is one of
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Attempts to means test interventions often are favored by conservatives as well as liberals, since means testing costs less than more universal programs while progressively distributing benefits. But means testing has its own consequences, such as high effective tax rates when benefits are phased out as income rises.
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From page 56... ...
Political considerations also may enter into the decision-making process. Thus even when evidence from economic evaluations is of the highest quality and is made available to those making decisions about resource allocation, a range of factors in addition to or even instead of economic considerations will likely influence those decisions.
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Consumers of Economic Evidence A wide array of individuals might be considered consumers or users of evidence from economic evaluations. Under the broadest definitions, users can include the researchers themselves, their funders, and others who may use the evidence to apply for new funding or inform research agendas.
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Such intermediaries include organizations in the public and private sectors that fund the evaluation research underlying economic evaluations or fund the economic evaluations themselves. Such organizations typically serve as consumers of economic evidence as well.
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Chapter 4 provides additional discussion of the roles of intermediaries. CURRENT USES OF ECONOMIC EVALUATION TO INFORM INVESTMENTS IN CHILDREN, YOUTH, AND FAMILIES As discussed above and in greater detail in Chapter 3, high-quality economic evaluations are based on credible evidence of intervention impact.
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and has also been subjected to several economic evaluations. As noted in Box 2-5, on the strength of the evaluation evidence, this program's reach has been significantly expanded across the United States.
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have also concluded that net benefits to society are positive, with benefit-cost ratios ranging from 2.89 to 6.20 (Karoly et al., 2005; Miller, 2013; Washington State Institute for Public Policy, 2015)
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. While state policy makers recognize the potential value of CEAs and BCAs, and there is some forward momentum toward increased production and use of such economic evidence, states vary considerably in the production and use of evidence from high-quality economic evaluations.
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Imposed Use The federal government has a long history of requiring the use of economic evaluation to justify action in some policy domains. The 1992 Office of Management and Budget (OMB)
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Conceptual Use With the growing emphasis on results-based accountability, evidence from economic evaluation has served to provide a larger framework within which to view policy choices concerning interventions serving children, youth, and families. Perhaps the best example of this type of conceptual use has occurred in the framing of investments in early childhood interventions.
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. The Perry Preschool example is a reminder that all economic evaluations of existing interventions provide the most information about the economics of that intervention in relation to the alternative, which may be no intervention or some alternative program.
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From page 66... ...
2012 and parole. • 5% increase in pretrial release rates • 40% increase in defendants participating in Monitored Conditional Release Program • Program that facilitates reentry into society was mandated by legislation Dedicated funding for State agencies are required to demonstrate • Funds used to support evidence-based Oregon evidence- or research- that an increased percentage of funds is programs increased from 25% to 75% based programs dedicated to evidence-based substance use • Significant reduction in recidivism and mental health treatment and to adult • Alternative Incarceration Program (AIP)
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Categorization of A bill requires the creation of standards for • Department of Social and Health Services Washington funded programs by program effectiveness, including evidence can now track: effectiveness of cost-effectiveness where possible, and N - umber of people served in evidence an inventory of programs meeting these based programs standards in child welfare, mental health, and P - ercentage of funds directed to evidence juvenile justice. based programs N - umber of eligible people who did not receive services • Juvenile justice system was able to: I - dentify eight programs meeting evidence standards A - scertain that 67% of treatment funds were being spent on evidence-based programs SOURCE: Data from Pew Charitable Trust and MacArthur Foundation (2015)
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Quality of Outputs • the absence of standards, producers apply methods differently, and at In times inappropriately or not comprehensively. • standards exist for reporting results of economic evaluation.
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Incentives, Capacity, and Infrastructure • Funding for quality economic evaluations is lacking or insufficient. • The cadre of trained professionals needed to conduct economic evalua tions is lacking.
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Box 2-6 enumerates several issues related to the quality of the available economic evidence pertaining to investments in children, youth, and families.9 Some of these issues can be categorized as affecting the quality of the inputs to economic evaluations. As noted earlier, CA is a tool that provides valuable information on its own and also provides the foundation for CEA and BCA.
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And even where the required evaluation evidence is strong and shadow prices exist, those who conduct economic evaluations may follow different practices with respect to key methods, which limits the comparability of results (Karoly, 2012)
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Department of Education, in the committee's open session discussion on March 23, 2015. Numerous factors beyond the quality of the evidence for the effectiveness of or economic return on an intervention can drive choices about what investments in children, youth, and families will be made in a community.12 Research on the usefulness and use of evidence in general has helped illuminate some pressing issues, many of which also help explain why economic evidence is not well utilized.
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From page 73... ...
. A number of studies have found that government leaders may perceive the influence and usefulness of local data, public opinion, and organizational capacity as more important than scientific evidence (Armstrong et al., 2013, 2014; Atkins et al., 2005; McGill et al., 2015)
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in the last 5 years has helped raise the visibility of economic evaluation and provide a forum for developing interest in the area, encouraging new researchers to enter the field, and sharing the latest developments in methods and findings. On the consumer side, many agencies at the federal, state, or local level lack the caacity to produce economic evaluations, and their staff do not necessarily possess the expertise required to be knowledgeable users of the evidence that is available (Pew Charitable Trust and MacArthur Foundation, 2013)
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. Those seeking to fund economic evaluations lack access to guidelines that could be used to establish requirements or standards for high-quality economic evaluations.
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. Updating the benefit-cost analysis of the High/Scope Perry Preschool Programme through age 40.
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. Economic evaluation research in the context of child welfare policy: A structured literature review and recommendations.
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of economic evaluation at the micro level: Can Bourdieu's theory provide a way forward for clinical decision-making? Social Science & Medicine, 70(12)
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. Updating the economic impacts of the High/Scope Perry Preschool Program.
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. Significant Benefits: The High-Scope Perry Preschool Study through Age 27.
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Cambridge, MA: National Bureau of Economic Research. Washington State Institute for Public Policy.
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