Letter to the editor: Use of cost–benefit analysis in evaluation

Abstract

I enjoyed reading the article on cost–benefit analysis (CBA) by Liddle, Wright & Koop in the June 2015 issue of the Evaluation Journal of Australasia. As a health economist-turned-evaluator I can vouch for the value of CBA and other economic methods (i.e. cost-effectiveness and cost-utility analysis) in evaluation. For example, understanding the relationship between the resources invested in a program and the consequences of the investment provides a deeper understanding of the program's worth, rather than examining either side of the equation (e.g. the ‘costs’ or ‘benefits’) in isolation.

I also welcome the suggestion by Liddle et al. (2015) that CBA can be used with traditional evaluation approaches, rather than as a replacement for them. However, more guidance is needed for evaluators and economists on how this should be done. To illustrate this point, a few considerations are outlined below. Firstly I will start with the strengths and limitations of CBA, then I will lead on to some considerations about when it might be appropriate to use CBA, when CBA alone might be insufficient to determine the worth of a program, and how CBA might be combined with traditional approaches.