Interpreting Cost-Benefit Analyses
Application: Interpreting Cost-Benefit Analyses
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Application: Interpreting Cost-Benefit Analyses
Cost-benefit analyses are designed to do just what their name implies—weigh the costs and benefits of a program or policy. This is important because, in a world of finite resources, people want to make sure that funds are allocated to programs that are as financially efficient as possible, thereby maximizing the impact of each dollar. As mentioned in this week’s Discussion, cost-benefit analysis is a type of program evaluation. To use this type of analysis, researchers weigh costs and benefits in economic terms, in other words, analysts must determine what the costs and benefits of a program or policy are (i.e., the variables) and assign monetary values to these variables. It sounds easy enough but can sometimes be complicated when non-economic costs and benefits (e.g., enhanced neighborhood beauty, psychological damage caused by a crime, or job satisfaction) must be assigned a monetary value. It is important to note that cost-benefit analysis differs from cost-effectiveness analysis in that the latter compares program costs to program outcomes.
For this Application Assignment, you evaluate the cost-benefit analysis of the program presented in the article, “A Cost-Benefit Study of a Breaking the Cycle Program for Juveniles.” As you examine the study, locate the key variables and consider the findings. Then consider whether you would continue or discontinue the program, based on the evidence presented in the study. As you formulate your answer, think about the advantages and disadvantages of continuing or canceling the program and the potential consequences for the affected community.
The assignment (2–3 pages):
• Describe the key variables within the study and provide a summary of the analysis.
• Explain whether you would continue or discontinue the program, based on the evidence provided in the analysis, and why.
• Finally, explain potential consequences of your decision for the affected community.
Support your Application Assignment with specific references to all resources used in its preparation. You are to provide a reference list for all resources, including those in the Learning Resources for this course
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SAMPLE ANSWER
Description of the key variables within the study and a summary of the analysis
The case study is on the cost benefit analysis of a Juvenile Breaking the Cycle (JBTC) program in Oregon, in the United States of America. The JBTC program was initiated to provide the juvenile justice monitoring system; monitoring and coordinated treatment to youth who were adjudged to be at high risk of using banned substances such as marijuana and who stood the highest risk of recidivism. The key variables within the study were the case management costs which included employee benefits and administrative overheads, court costs, treatment costs and detention costs. The study involved comparing the JBTC group with a comparison group (Cowell, Lattimore & Krebs, 2010).
The study found that the average group in JBTC program, between intake and 6 months, incurred approximately $230 more costs per youth than the costs per youth in the average group in the comparison group. Costs per youth in the JBTC group in the period of 6 to 12 months rose to approximately $1,000 as compared to the similar period of 6 to 12 months in the comparison group. This implied that tax payers will have to pay more to fund the JBTC program at face value (Cowell, Lattimore & Krebs, 2010). However a further examination of juvenile justice costs showed that after intake, additional public costs on the majority of the unadjusted mean costs would diminish as youth progressed in the second year of the JBTC program. The additional juvenile justice costs in the 6-to-12 month period were found to be more by $434 per youth for the final 6 month period of the JBTC program. This difference fell to $52 which implies that the cost difference across would have greatly reduced in the second year after intake if juvenile justice costs were to continue to drive total costs of the program(Cowell, Lattimore & Krebs, 2010).
A decision on whether to continue or discontinue the program based on the evidence provided
Based on the analysis above, it would appear that the program should be discontinued due to the fact that the costs incurred by taxpayers in running the JBTC program in the first year was much higher than what was incurred by the average group in the comparison group. The analysis found that in the period between intake and 6 months the costs were more by $230 per youth and rose to $1,000 per youth in the period between 6 months to 12 months as compared to what was incurred by the average group in the comparison group (Cowell, Lattimore & Krebs, 2010). However after analyzing other factors it would be a prudent use of public funds if the program was allowed to continue. The study found that the juvenile justice costs, on the additional public costs on the majority of the unadjusted mean costs, would diminish as youth progressed in the second year of the JBTC program. The study did not include some crucial costs that would have affected the outcome of the cost- benefits study objectively such as probation costs, tax payer supported costs, etc. These costs might have altered the findings of the study (Cowell, Lattimore & Krebs, 2010).
The selection of the JBTC youth was drawn from youth who were at high risk of getting involved in substance abuse and at high risk of recidivism as opposed to the youth in the comparison group whose selection criteria is not disclosed. This explains why the costs of the JBTC program are higher since these youth would ordinarily have used substances and hence incurred higher costs even if they were in the comparison group (Cowell, Lattimore & Krebs, 2010). The two groups had dissimilar characteristics and should not have been compared at all. Data on costs incurred in the second year was also unavailable even though initial examination showed that these costs would be similar to what would be incurred by the comparison group. The study should be done for about four years to objectively determine its cost- benefit analysis and make a decision whether to continue or discontinue the program. With the rates of youth, drug and substance abuse, crime and arrests growing each year in the United States as shown in the study, it would be prudent to not only continue the program but expand it to include even more deserving youth (Yeh, 2010; Zedlewski,2009).
The potential consequences of the decision for the affected community
The decision to continue the program would initially incur the community substantial amounts of money for each youth joining the program in the first year which would be a burden to tax payers at face value. However, in the second year the costs would be much less and the benefits much more. The potential benefits of the program are however much greater in the long run. The JBTC program would address the problem of substance abuse and recidivism without which the youth would carry this behavior into adulthood (Cowell, Lattimore & Krebs, 2010). These adults would thereafter create dysfunctional families leading to high incidences of divorce, child abuse, suicides and crime. The costs at this stage in the lives of these youth would run into millions of dollars to manage. Youths who go through this program at this early stage in their lives would be remodeled to go back to school or put more attention to their studies and pursue a career which would eventually produce productive citizens for the benefit of the community. The program would contribute in a reduction in crime and substance abuse which is a menace to the community and keeps investors away from investing in the community (Braga, Kennedy, Waring & Piehl, 2001).
References
Braga, A. A., Kennedy, D. M., Waring, E. J., & Piehl, A. (2001). Problem-oriented policing, deterrence, and youth violence: An evaluation of Boston’s Operation Ceasefire. Journal of Research in Crime and Delinquency, 38(3), 195–225.
Cowell, A. J., Lattimore, P. K., & Krebs, C. P. (2010). A cost-benefit study of a breaking the cycle program for juveniles. Journal of Research in Crime and Delinquency, 47(2),241–262.
Yeh, S. S. (2010). Cost-benefit analysis of reducing crime through electronic monitoring of parolees and probationers. Journal of Criminal Justice, 38(5), 1090–1096.
Zedlewski, E. (2009). Conducting cost benefit analyses in criminal justice evaluations: Do we dare? European Journal on Criminal Policy and Research, 15(4), 355–364.
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