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  • Cost-Benefit Analysis

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).

Considerations in Applying Benefit-Cost Analysis to Preventive Interventions for Children, Youth, and Families: Workshop Summary
Olson & Bogard (2014)
Institute of Medicine & National Research Council.
Addresses issues to consider when doing a cost-benefit analysis, how to do the assessment, and how to take the results of the analysis and have them inform policy. Examples are also provided.

Cost-Benefit Analysis of Two Child Abuse and Neglect Primary Prevention Programs for US States
Peterson, Florence, Thomas, & Klevens (2018)
Prevention Science: The Official Journal of the Society for Prevention Research, 19(6)
Assesses the budget and societal impact of implementing two child abuse and neglect prevention programs. The article explains how the programs can potentially offset the implementation cost, depending on the State.

Early Childhood Home Visitation Programs in Arizona: A Benefit-Cost Analysis (PDF - 839 KB)
Evans & Shoemaker (2016)
Arizona State University
Analyzes the costs and benefits of evidence-based early childhood home visitation programs. Seven programs were included in the study, which concluded that the benefits greatly outweigh the costs.

Improving Child Welfare Outcomes: Balancing Investments in Prevention and Treatment
Ringel, Schultz, Mendelsohn, Holliday, Sieck, Edochie, & Davis (2017)
Provides an analysis of the effects of prevention programs and how different models of services could affect costs and outcomes. It suggests that expanding prevention and treatment efforts can lead to a net cost reduction.

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