I’ve just updated my guide to selecting different types of economic evaluation analysis. Selecting which type of economic evaluation analysis can be confusing for people who aren’t economists or trained in doing such analyses. My guide makes four points, the first is that when doing economic analyses you should always clearly communicate the variables which are included in, and not included in the analysis. The most transparent and accessible way to do this is to do it against a visual model of the program being analyzed.
The second point is that discussion of economic analysis often does not focus enough on the question of whether there are robust estimates of the effect-size of a program to feed into such an analysis. (The effect-size is how large an effect an intervention has on outcomes). I once talked to a senior economist in the World Bank who said that many programs basically make up the effect-sizes which are then plugged into economic analyses and I have seen the same type of behavior myself. The focus of much discussion of economic analysis neglects the effect-size question and focused on the technicalities of how to do an economic analysis.
The third point is that a great approach for outcomes, policy and evaluation people is to start from what they know about the robustness of effect-size information available on a program. This information, which they should know, is what they need to start on working out which type of economic analysis they should use. The guide then takes the reader to one of ten possible types of economic analysis based on the starting point of knowing whether robust effect-size estimates are, or are not, available.
The fourth point that that, even where there is no information on effect-sizes available, some economic evaluation can still be done. This type is what I call Assumed or Hypothetical Cost Effectiveness or Cost Benefit Analysis. Instead of pretending that an effect-size estimate can be struck in the absence of any robust effect-size information, this type of analysis simply ‘assumes’ one or more levels of effect-size and does the analysis. It is totally transparent about what it being done and leaves it up to the reader to work out whether they want to assume a particular level of effect-size. For those familiar with economic evaluation this approach is, in effect, giving much more prominence to the sensitivity analysis which should be included in any good economic evaluation.
Anyway, check out the article and you can comment on whether you think it is useful and how it could be improved up on the DoView Linkedin Community of Practice where you can discuss it if you wish.
Paul Duignan, PhD. More info OutcomesCentral.org. Follow on Twitter.com/paulduignan.
A while ago I came across a report of a cost-benefit analysis on climate change in which the author of the analysis admitted that his model may come in for some heavy criticism because it didn’t include any cost for sea level rises. How cruel and heartless of his critics. I don’t know who paid for this particular report or why it was done, so I don’t want to comment on it at all. However cost benefit analyzes which leave out or minimize important costs are a well used weapon in the lobbyist’s armory. Policy makers, the media and the public only have time to catch the bottom line – the cost will be this or that much and then move on. 
Outcomesblog.org 