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A personalized history of the formal or institutionalized practice of cost and effectiveness comparisons used by public and private organizations in decisionmaking. Cost-effectiveness was not really an organized activity until after World War II. Historically, examples occurred in 11th-century China; 18th-century Bavaria; the U.S. War Department, 1886; and in a study of railway location, 1887. Cost-effectiveness and cost-benefit analysis today — although recently developed from economic theory, practical engineering, and operational analysis — have grown and improved rapidly. They can be improved still more: by following distribution of both costs and benefits; by a more thorough treatment of the social opportunity costs; by considering costs of implementation and organizational change; and by using new analytic methods, such as [n]-person game theory and techniques for systematic application of group judgment and intuition. Cost-effectiveness and cost-benefit analysis still provide only partial answers — not definite and objective conclusions.

This report is part of the RAND Corporation paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.

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