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Cost-Benefit Analysis

Cost-benefit analysis may be viewed as a way to calculate society's "return on investment" from an activity or program. These analyses attempt to calculate the actual costs of delivering services and the monetary value of improving particular outcomes for children and families, and to measure whether the benefits exceed the costs. Cost-benefit analysis is often used at a macro level to compare programs that achieve different outcomes (for example, deciding whether to fund a child abuse prevention program or a program to reduce youth violence) or to measure the value of a particular program.

To do a cost-benefit analysis, programs must first accurately calculate their costs. Programs also must establish a causal relationship between the program and particular outcomes (benefits) through an outcome evaluation. Cost-benefit analyses then attach dollar values to those benefits. For example, if a program can demonstrate that it led to a 10 percent reduction in out-of-home care services, it can attach a value to those services to determine the program's monetary benefit.

Child abuse prevention program benefits may include:

• Reduced health and mental health care costs
• Reduced costs of out-of-home care services
• Reduced costs of child welfare services
• Reduced law enforcement and judicial system costs for intervention in cases of child abuse and neglect
• Increased earnings of the child's family members

Although much more difficult to quantify, some cost-benefit analyses also attempt to account for a program's nonmonetary benefits, such as:

• Reduced personal and family stress
• Fewer incidents of child abuse
• Improved social functioning of the children
• Improved physical health
• Improved mental health
• Improved educational achievement

Programs can then compare the program's costs to its benefits. If benefits exceed costs, the program has established an economic justification for continuing these services. If not, programs will have to look for another justification (ethical, political, socially equitable).

Selected Resources Assessing Costs and Benefits of Early Childhood Intervention Programs: Overview and Application to the Starting Early Starting Smart Program Casey Family Programs (2001) Recommends methodological considerations for evaluating the costs and benefits of early childhood intervention programs. Includes results of cost-benefit analyses for several programs. Intensive Family Preservation Programs: Program Fidelity Influences Effectiveness Washington State Institute for Public Policy (2006) Reviews Intensive Family Preservation Programs' fidelity and estimates the costs and benefits of adhering closely to the program model. Prevention Pays (PDF - 354 KB) Washington State Prevention Pays Work Group (2002) Research demonstrates the potential savings created by effective prevention and early intervention programs. Benefits and Costs of Prevention and Early Intervention Programs for Youth Washington State Institute for Public Policy (2004) An overview of research-based prevention and early intervention programs. Communicating Program Value of Family Life and Parenting Education Programs to Decision Makers DeBord Journal of Extension, 43(2), 2005 Discusses strategies to convey the value of prevention education in communities and presents two examples of ways to explain program impact.

Updated on December 7, 2007