International research and developments
Can a costly intervention be cost–effective? 2006
Objectives. This study examines the cost-effectiveness of the Fast Track intervention, a multiyear, multi-component intervention designed to reduce violence among at-risk children. Outcomes measured include a diagnosis of conduct disorder; an index of interpersonal violence and index crimes.
Design. Costs of the intervention were estimated using program budgets. Incremental cost effectiveness ratios (ICER’s) were computed to determine the cost per unit improvement in the three outcomes measured in year 10 of the study.
Results. Examination for the total sample showed that the intervention was not cost-effective at likely levels of policy maker willingness to pay for the three outcomes. Subsequent analysis of those most at-risk, however, showed that the intervention was most likely cost-effective in terms of conduct disorder diagnosis ($.83-million per case of conduct disorder averted against a willingness to pay set at $1-million per case of conduct disorder diverted).
Conclusions. Results indicate that the intervention is cost-effective for the highest risk children. From a policy standpoint, this finding is encouraging since such children are likely to generate higher costs for society over their lifetimes. Substantial barriers, however, to cost-effectiveness remain, such as the ability to effectively identify and recruit such high-risk children in future implementations.
In spite of recent declines in juvenile delinquency and violence, conduct problems among children and youth remain a serious problem. Particularly problematic are “early starters”, children or youth whose conduct problems emerge early in life. Such problems often lead to personal and social costs later in life. Those costs include (but are not limited to) criminal activities, substance use and abuse and problems associated with early sexual debut, such as unwanted pregnancies and sexually transmitted diseases. The costs of a life of crime include government expenditures for criminal justice investigation, arrest, adjudication, and incarceration; costs to victims, such as medical costs, time missed from work, the value of stolen property as well as loss of life; and costs that accrue to the criminal and his or her family, such as lost wages. In the most comprehensive analysis of its kind, Cohen estimates that the social costs of a life of crime total nearly $2,000,000 in today’s dollars. This value is averaged across a range of likely values and based on the costs to society of three conditions: career criminal ($1.3-$1.5-million), heavy drug user ($370,000-$970,000), and high-school dropout ($243,000-$388,000).
The high costs of conduct problems–and the fact that a small proportion of children and youth account for a disproportionate share of crime and delinquency–suggests that society should consider devoting considerable resources to targeted prevention. As Russell (1986) argues, however, several features of prevention work against cost-effectiveness, even for effective programs (five). First, by its very nature, prevention involves expenditures in the present while the benefits accrue in the future. Because money now is worth more than money later, a dollar spent today has to generate more than a dollar’s worth of benefits in the future. Second, because of five imperfect targeting, prevention often expends resources on those who may not develop the problem or illness of interest. Those expenditures raise the costs of the program but generate little or perhaps even no return.
These characteristics are especially applicable in the prevention of conduct problems. As noted, research suggests that intervention toward those at risk for these problems should begin early in life, before a series of self-reinforcing mechanisms become entrenched. Starting early may be necessary, but at the same time, doing so raises the bar for cost-effectiveness.
This report can be found at: http://www.unc.edu/~emfoster/papers/FT_icer.pdf
Economic Benefits of Drug Treatment: A critical review of the evidence for Policy Makers, 2005
Substance abuse and dependence and their consequences are associated with substantial health and social costs in the United States. Large numbers of Americans continue to suffer from the effects of substance abuse, and it remains one our most serious health and social problems (ONDCP, 2001). As a result, federal, state, and local governments have invested substantial amounts of money for prevention and treatment programs aimed at reducing the impact of alcohol and illegal drug use. Nearly two decades of research finds that substance abuse treatment, especially when it incorporates evidence-based practice, achieves clinically significant reductions in substance use and crime, and improvements in health and social function for many patients (Gerstein & Harwood, 1990; McLellan et al., 1996; Prendergast et al., 2000). However, treatment providers, funders, and regulators face growing challenges to sustaining treatment funding, improving the targeting of resources, making decisions about alternative treatment models, and maximizing the effectiveness of services. The current climate is defined by declining state and federal government resources, soaring health care costs and prison budgets, and competing constituencies for limited government dollars. As states increasingly move toward performance-based contracting for treatment programs, such contracting is likely not only to require that programs demonstrate their success in treating drug and alcohol problems, but also their cost efficiency (Garnick et al., 2002; McCorry et al., 2000). Findings from economic analyses can help policy makers to make more rational and informed decisions about allocating resources to different types of treatment and target populations in a more cost-effective way.
The current review is designed to synthesize for policy makers, regulators, and treatment professionals the research findings on the economic impact of treatment, including treatment costs, cost effectiveness analysis, and cost benefit analysis. The key research gaps that need to be addressed are also summarized.
This report can be found at: http://www.jointogether.org/resources/the-economic-benefits-of-drug.html or in PDF format at: http://www.adpana.com/EconomicBenefits_2005Feb.pdf
Benefits and Costs of Prevention and Early Intervention Programs for Youth, 2004
Does prevention pay? Can an ounce of prevention avoid (at least) an ounce of cure? More specifically for public policy purposes, is there credible scientific evidence that for each dollar a legislature spends on “research-based” prevention or early intervention programs for youth, more than a dollar’s worth of benefits will be generated? If so, what are the policy options that offer taxpayers the best return on their dollar?
These are among the ambitious questions the 2003 Washington State Legislature assigned the Washington State Institute for Public Policy (Institute). This report describes findings and provides an overview of how the analysis was conducted. An Appendix, published separately, contains a full description of results and methods.
The report can be found at: http://www.wsipp.wa.gov/pub.asp?docid=04-07-3901 or the summary report in PDF format at: http://www.wsipp.wa.gov/rptfiles/04-07-3901.pdf
The Economics of Juvenile Jurisdiction: A white paper from the research roundtable on estimating the costs and benefits of the separate juvenile justice system, 2005
Debates about whether to handle young offenders in the criminal or juvenile justice system traditionally focus on moral and legal principles, developmental differences between juveniles and adults, and the relative effectiveness of prevention versus punishment. This white paper examines the feasibility of adding an economic perspective to the debate. It considers the tools of cost-benefit analysis and how they might be employed to assess the economic consequences of criminal versus juvenile justice. In other words, do the benefits of using a separate system for juvenile offenders outweigh the costs? What are the costs and benefits of criminal court trials for young people and are they measurable? Are there particular types of offenders or particular court cases for which one system of justice is more cost-effective than the other?
This paper grows out of a meeting organized by the MacArthur Foundation Research Network on Adolescent Development and Juvenile Justice (http://www.mac-adoldev-juvjustice.org). The Research Roundtable on Estimating the Costs and Benefits of the Separate Juvenile Justice System was held in 2004 at the Urban Institute in Washington, D.C. The Research Roundtable included experts in adolescent development, juvenile justice, public policy, and economics. Members of the roundtable reviewed various approaches for analyzing the costs and benefits of juvenile versus criminal justice and considered a range of methods for conducting research on the topic. The Urban Institute drew upon the comments of participants to prepare this paper. The discussion that follows describes the conclusions of the Research Roundtable and recommends a potential research agenda for investigating the economic consequences of legal decision making in cases involving youthful offenders.
This report can be found at: http://www.urban.org/publications/411208.html or in PDF format at: http://www.urban.org/UploadedPDF/411208_Juvenile_Jurisdiction.pdf
Cost-Benefit Analysis and environmental decision making
As environmental issues grow in complexity and pressures increase for localities to remain fiscally sound in the face of increasing responsibilities, cost-benefit analysis offers local decision makers a potentially potent source of counsel. This decision support tool provides a format for enumerating the range of benefits and costs surrounding a decision, aggregating the affects over time using an approach called discounting, and arriving at a dollar-denominated "present value" that, in concept, is comparable with other governmental uses for scarce financial resources, including leaving them in the hands of taxpayers.
In simple terms, cost-benefit analysis imposes an accounting framework that prescribes classes of benefits and costs to consider, means to measure them, and approaches for aggregating them. Key parameters, like the rate at which to discount, are highlighted, and ways to recognize inherent uncertainties are supplied, as are ways to deal with uncertainties. Even though the approach originated as an analogy to private studies of investment, and thus to calculate a "go-no-go" decision, the technique is flexible and can be used to choose among a range of alternatives, to make comparable projects of differing lengths, and to identify instances where costs and benefits place identifiable groups at special advantage or disadvantage. Given these attributes, there is little wonder that pressures to apply the technique to important decisions are growing. Of course, no tool is perfect, and cost-benefit analysis suffers from many criticisms. These result from the rudimentary techniques used to measure diverse benefits and costs in dollar terms, the equity concerns left unrecognized in the present value calculation, and the fact that, to some, environmental concerns fall properly under the realm of ethics, rather than economics.
Nevertheless, the cost-benefit methodology shines a light brightly on "efficiency attributes" attendant to environmental decision making--namely the tasks that could be accomplished if the specific project, program, or activity under consideration were foregone. Whether viewed as a means to organize the decision making process or a way to optimize it, cost-benefit analysis imposes a strict template on the economic foundations of decision making and causes at least a portion of the debate to focus on tradeoffs, alternatives, and opportunities given up. But all of this comes at a price. The technique is difficult, specialized and costly to apply. Adapting it to issues of moderate size and to agencies with modest resources, as are found at the sub-national level, provides a significant challenge, while offering marked rewards.
This report can be found at: http://sunsite.utk.edu/ncedr/tools/othertools/costbenefit/overview.htm
Cost-effectiveness – Chapter 5: Youth Violence: A report of the Surgeon General
Violence costs the United States an estimated $425 billion in direct and indirect costs each year (Illinois Center for Violence Prevention, 1998). Of these costs, approximately $90 billion is spent on the criminal justice system, $65 billion on security, $5 billion on the treatment of victims, and $170 billion on lost productivity and quality of life. The annual costs to victims are approximately $178 billion (Illinois Center for Violence Prevention, 1998). The most logical way to reduce these costs is to prevent violence altogether. Preventing a single violent crime not only averts the costs of incarceration, it also prevents the short- and long-term costs to victims, including material losses and the costs associated with physical and psychological trauma.
Despite these facts, policy in the United States continues to focus on get-tough laws and incarceration for serious violent criminals, as opposed to prevention and intervention (Greenwood, 1995). Federal spending on school-based crime, violence, and drug prevention programs is quite modest, compared to spending on crime and drug control strategies such as policing and prison construction (Gottfredson et al., in press). Not only are preventive approaches more beneficial than get-tough laws, some prevention and intervention strategies cost less over the long run than mandatory sentences and other get-tough approaches.
This chapter highlights studies and findings completed that examines the cost-effectiveness of youth violence prevention programs.
This report can be found at: http://www.surgeongeneral.gov/library/youthviolence/chapter5/sec7.html
Financing Early Childhood Education and Care Services in OECD Countries
This is a revised paper of that commissioned by the OECD in preparation for its third workshop in Rotterdam on 22-24 January 2003. The revised paper focuses on financing issues in relation to Early Childhood Education and Care (ECEC), providing a good overview of existing research into and understanding of the benefits and costs of public investment in ECEC.
The advantages and disadvantages of ECEC programs identified by various studies are discussed in some detail in Chapter 1 and conclusions on this research drawn, however, the authors note there have been limited cost-benefit analysis studies done of ECEC programs.
Chapter 2 of the paper highlights the issues associated with performing cost-benefit analysis of ECEC services, including data collection and analysis problems and makes some recommendations about the data requirements of any future cost-benefit studies.
This report can be found at: http://www.oecd.org/home/0,2987,en_2649_201185_1_1_1_1_1,00.html or in PDF format at: http://www.oecd.org/dataoecd/55/59/28123665.pdf
Parenting programme for parents of children at risk of developing conduct disorder: cost effectiveness analysis, 2007
Objective. To investigate the cost effectiveness of a parenting programme.
Design. An incremental cost effectiveness analysis alongside a pragmatic randomised controlled trial of the effectiveness of a group parenting programme delivered through Sure Start in the community.
Intervention. The Webster-Stratton Incredible Years basic parenting programme or a six month waiting list control. Main outcome measure Incremental cost per unit of improvement on the intensity score of the Eyberg child behaviour inventory. Results. The bootstrapped incremental cost effectiveness ratio point estimate was £73 (€109, $142) per one point improvement on the intensity score (95% confidence interval £42 to £140). It would cost £5486 (€8190, $10 666) to bring the child with the highest intensity score to below the clinical cut-off point and £1344 (€2006, $2618) to bring the average child in the intervention group within the non-clinical limits on the intensity score (below 127). For a ceiling ratio of £100 (€149, $194) per point increase in intensity score, there is an 83.9% chance of the intervention being cost effective. The mean cost per child attending the parenting group was £1934 (€2887, $3760) for eight children and £1289 (€1924, $2506) for 12 children, including initial costs and materials for training group leaders. When the sample was categorised into relatively mild, moderate, and severe behaviour groups based on intensity scores at baseline the intervention seemed more cost effective in those with the highest risk of developing conduct disorder. Conclusion. This parenting programme improves child behaviour as measured by the intensity score of the Eyberg child behaviour inventory at a relatively low cost and was cost effective compared with the waiting list control. This parenting programme involves modest costs and demonstrates strong clinical effect, suggesting it would represent good value for money for public spending. This report can be found at: http://www.bmj.com/cgi/content/full/334/7595/682 or in PDF format at: http://www.bmj.com/cgi/reprint/334/7595/682
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