Valuing Benefits in Benefit-Cost Studies of Social Programs

Lynn A. Karoly

ResearchPublished Oct 27, 2008

This study assesses the state of the art of the measurement and use of estimated economic value, or “shadow prices,” in applying benefit-cost analysis (BCA) to social program evaluation. It reviews 39 effective social programs whose effects have been evaluated using scientifically rigorous methods and documents outcomes affected by the programs. The study also reviews the 22 social programs with an associated BCA and the shadow prices used to value benefits. The study finds that many of the important benefits that accrue from social programs are rarely, if ever, monetized; shadow prices for outcomes valued in BCAs do not consistently capture the full range of societal benefits or costs; even where there is a well-established literature for valuing outcomes, the use of shadow prices is not consistent across studies of social programs; and program benefits that extend into the future may be monetized, but uncertainty associated with future costs and benefits needs to be recognized. These findings suggest directions for future methodological work to advance the use of BCA in evaluating the economic returns from social programs.

Topics

Document Details

Citation

Chicago Manual of Style

Karoly, Lynn A., Valuing Benefits in Benefit-Cost Studies of Social Programs. Santa Monica, CA: RAND Corporation, 2008. https://www.rand.org/pubs/technical_reports/TR643.html.
BibTeX RIS

The research in this report was sponsored by the John D. and Catherine T. MacArthur Foundation and conducted by RAND Labor and Population.

This publication is part of the RAND technical report series. RAND technical reports, products of RAND from 2003 to 2011, presented research findings on a topic limited in scope or intended for a narrow audience; discussions of the methodology employed in research; literature reviews, survey instruments, modeling exercises, guidelines for practitioners and research professionals, and supporting documentation; and preliminary findings. All RAND technical reports were subject to rigorous peer review to ensure high standards for research quality and objectivity.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.