Public Policy Analytical Methods: Benefit-Cost, Cost-Effectiveness, and Risk Analysis
Level 3:  Benefit-Cost, Cost-Effectiveness, and Risk Analysis

The first three topics that we’ll explore at Level 3 are benefit-cost analysis, cost-effectiveness analysis, and risk analysis. 


This course will be offered as a pilot in the Fall of 2020.  Because this class is a pilot, it will be heavily discounted so students can be part of the co-creation process for class content. As a result, a detailed course outline is not available at this time, but let's discuss how each technique is related to public policy analysis.

Benefit-Cost Analysis (BCA) is used to provide information to support the "efficiency" portion of the 4E's of public policy analysis (effectiveness, efficiency, equity, and ease of political acceptability.) 

As described by two of the top scholars in the field, Haveman and Weimer:

"Cost–benefit analysis (CBA) is a method for assessing the economic efficiency of proposed public policies through the systematic prediction of social costs and social benefits.


The concepts of ‘willingness to pay’ and ‘opportunity cost’ guide the valuation of projected policy effects in terms of a money metric.


Comprehensively valuing effects and aggregating across all members of society yields the net social benefits of the policy.


A policy with positive net social benefits is economically efficient relative to the status quo.


When economic efficiency is the only relevant social goal, CBA provides an appropriate decision rule: choose the policy, or set of policies, that maximizes net social benefits."

Cost-effectiveness analysis is a partner to BCA, but it focuses more on the human component.  From the CDC

"Cost-effectiveness analysis (CEA) is a way to examine both the costs and health outcomes of one or more interventions. It compares an intervention to another intervention (or the status quo) by estimating how much it costs to gain a unit of a health outcome, like a life year gained or a death prevented.


CEA provides information on health and cost impacts of an intervention compared to an alternative intervention (or the status quo). If the net costs of an intervention are positive (which means a more effective intervention is more costly), the results are presented as a cost-effectiveness ratio. A cost-effectiveness ratio is the net cost divided by changes in health outcomes.


Examples include cost per case of disease prevented or cost per death averted. However, if the net costs are negative (which means a more effective intervention is less costly), the results are reported as net cost savings."

From "Risk Analysis: A Tool for Policy Decisions" by W.D. Rowe, we can see how risk analysis is used in decisionmaking. Among the 4E's, risk analysis can be used all of them in some sense, but it is often most important in "equity" -- where a policy that helps one group may harm another.

"Increased public and regulatory concern with risks imposed by technological undertakings has focused attention on risk analysis as a tool for aiding in risk-based decisions.


Promulgating health, safety and environmental regulations; addressing product and environmental impairment liability in the light of recent adverse court decisions; qualifying new chemicals, pesticides and technological facilities to meet regulations are but a few of the many areas that require new tools and approaches to identify and sort out the many issues involved.


Risk analysis, encompassing the assessment and management of risk, has been promoted as one such approach."


Hopefully, these brief descriptions of each analytical method that is part of this class will encourage you to enroll so you can learn more about each and how to practice them in your policy work.

How it Works:  You can go through the material at the pace that works for you.  The content of the class is presented through short-taped lectures of about 15 minutes on our learning management system called Ruzuku.  You will then practice the content of each lesson through exercises. The instructor then provides individual feedback on each exercise within Ruzuku.


During the 6-weeks of the class, there will be a one-hour live Q&A session where you can ask questions and students can volunteer for their exercises to be "workshopped."   The date and time for the weekly Q&A session will be determined by the vote of the registered participants.  Evening and weekend options will be offered.

Although the Q&A sessions occur over in 6 weeks, it sometimes takes longer for students to complete the exercises.  You will continue to receive feedback for up to 4 weeks after the Q&A sessions end through Ruzuku.

In addition, you have three individual coaching sessions with a date/time based on your schedule and long-term instructor email access and to the Academy's Slack, which includes announcements of jobs, fellowships, seminars, and workshops.