Cost-Effectiveness Analysis

Cost-effectiveness Analysis 

Cost-effectiveness analysis compares different program alternatives for achieving a given set of goals; it is also applied by considering a fixed budget and choosing alternatives that provide the highest rate of goal achievement.

(Pal 2006, 322)

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Cost-effectiveness analysis techniques are simpler than cost-benefit analysis techniques in that they take program goals or outcomes as given, and seek to weigh different cost strategies for achieving those goals against one another. They assume that the strategy incurring the lowest cost is preferred. Cost-effectiveness analysis can be applied in reverse when working with fixed budgets to consider different alternatives that provide the “most bang for the buck,” and typically relate “the monetized costs of a program to a nonmonetized measure of effects” (Pal 2006, 35).

References

Pal. Leslie. 2006. Beyond Policy Analysis: Public Issue Management in Turbulent Times, 3rd ed. Toronto: Nelson Education.