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PD Presenters: Brian Yates on Doing Cost-Inclusive Evaluation. Part IV: Cost-Effectiveness Analysis and Cost-Utility Analysis

Hi! I’m Brian Yates. This is the fourth piece in a series of AEA365’s on using costs in evaluation. I started using costs as well as outcomes in my program evaluations in the mid-1970s, when I joined the faculty of the Department of Psychology at American University in Washington, DC. Today I’m still including costs in my research and consultation on mental health, substance abuse, and consumer-operated services.

Three other 365ers focused on evaluating costs, benefits, and cost-benefit of programs; there’s even more to cost-inclusive evaluation!

Lesson Learned: What if important outcomes of a program are not monetary, and cannot be converted into monetary units? Easy answer: do a cost-effectiveness analysis or a cost-utility analysis!

Cost-effectiveness analysis (CEA) describes relationships between types, amounts, and values of resources consumed by a program and the outcomes of that program — with outcomes measured in their natural units. For example, the outcome of a prevention program for seasonal depression could be measured as days free of depression. Program costs could be contrasted to these outcomes by calculating “dollars per depression-free day” or “average hours of therapy A versus therapy B per depression-free day generated.”

Hot Tip: How to compare apples and oranges. “But how can you compare costs of generating one outcome with costs of generating another? Cost per depression-free day versus cost per drug-free day?!” No problem: compare these “apples” and “oranges” by bumping the units up one notch of generality, to fruit. Diverse health program outcomes now are measured in common units of Quality-Adjusted Life Years (QALYs), with a year of living with depression as being worth substantially less than a year of living without depression. This and other forms of cost-utility analysis (CUA ) are increasingly used for health services funding.

Lessons Learned:

Insight Offered: It’s easy to dismiss using of costs in evaluation with “…shows the price of everything and the value of nothing.” Actually, cost-inclusive evaluation encompasses types and amounts of limited societal resources used to achieve outcomes measured in ways meaningful to funders and other stakeholders.

More? Yes! Lately I’ve gained better understanding of relationships between resources invested in programs and outcomes produced by programs when I work with stakeholders to also include information on program activities and clients’ biopsychosocial processes. More on that later.

Rad Resources:

Cost-effectiveness analysis (2nd edition) by Levin and McEwan.

Analyzing costs, procedures, processes, and outcomes in human services by Yates.

Want to learn more? Brian will be presenting a Professional Development workshop at Evaluation 2014 in Denver, CO. Click here for a complete listing of Professional Development workshops offered at Evaluation 2014. Do you have questions, concerns, kudos, or content to extend this aea365 contribution? Please add them in the comments section for this post on the aea365 webpage so that we may enrich our community of practice. Would you like to submit an aea365 Tip? Please send a note of interest to aea365@eval.org. aea365 is sponsored by the American Evaluation Association and provides a Tip-a-Day by and for evaluators.


1 thought on “PD Presenters: Brian Yates on Doing Cost-Inclusive Evaluation. Part IV: Cost-Effectiveness Analysis and Cost-Utility Analysis”

  1. Mr. Yates, I agree that costs should always be part of any evaluation. Money and other resources are finite. The clients and stakeholders of various programs are entitled to an accounting. Your concept of cost-effectiveness analysis offers a new parameter for clients and stakeholders to make judgments about program efficacy. I would think that a multi-measurement type of evaluation, though time consuming and maybe expensive, would provide a comprehensive report as to a program’s costs and value.

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