Conducting Cost-Effectiveness Analysis (CEA)
Calculating the cost-effectiveness of a program—for instance, dollars spent per additional day of student attendance at school—can offer insights into which programs are likely to provide the greatest value for money in given situations. Cost-effectiveness analysis (CEA) summarizes complex programs in terms of a simple ratio of costs to impacts and allows us to use this common measure to compare different programs evaluated in different countries in different years. It may not, by itself, provide sufficient information to inform all policy or investment decisions, but it can be a useful starting point for governments, donors, program implementers, and researchers when choosing between different programs that aim to achieve the same outcome.
To calculate CEA, you need two pieces of data: an estimate of the program’s impact and the cost of the program. While there are a growing number of rigorous impact evaluations from which to draw estimates of program effects, data on program cost is still scarce. In our experience, it is much easier and more accurate to collect cost information during the implementation of the program instead of trying to piece together the data after the evaluation is completed. However, gathering these data in real time is difficult. In order to help other organizations, conduct this type of analysis, J-PAL has developed some resources on facilitate the collection of quality cost data:
- J-PAL Costing Guidelines: This document provides an outline on how to approach collecting cost information, what costs to include and exclude, and how detailed cost data should be.
- J-PAL Costing Template: This template aims to help users generate an estimate of total program costs. It provides users with a comprehensive list of the many different cost categories or ingredients that may be included in a program. Then, within each category, the template prompts users to input the various details about cost data (unit cost, number of units, currency, year, etc.).
- Basic J-PAL Costing Template: It is not always possible to gather very detailed cost data. If this data is unavailable, this template helps users generate a rough estimate of total program cost by breaking costs out into the main, general categories or ingredients.
- Comparative Cost-Effectiveness Analysis to Inform Policy in Developing Countries: There are many decisions to make when conducting CEAs including what discount rate and exchange rate to use. J-PAL’s CEA document explains the choices made by J-PAL with illustrations of how different choices would impact relatively cost-effectiveness of student attendance programs.
J-PAL has conducted a number of CEAs. For examples in Education, see our analysis of programs aimed at improving student participation and programs aimed at increasing test score performance. If you have any questions about these resources or about CEA, please contact Kyle Murphy.