Early Childhood Program Evaluations: A Decision-Maker’s Guide

 

Do the program’s benefits exceed
its costs?

Return on investment

Economists tell us that the most profitable investments are not necessarily generated by programs that produce the biggest “effect sizes” but rather by those that lead to the largest benefits relative to costs. According to such calculations, less intensive programs cost less and therefore do not need to generate the same volume of benefits as more intensive programs in order to produce a social profit. On balance, it is impossible to generalize about the relative profitability of programs based on costs, benefits, or effect sizes taken alone.

Some program evaluations include a detailed cost-benefit accounting in their analyses.
If done well (you may wish to consult with someone with expertise in cost-benefit assessment to judge the quality of a specific study’s accounting), the obvious question is whether a program’s benefits exceeded its costs. Properly done, costs and benefits are calculated on a “present value” basis to reflect the fact that tying up public money in the short run to produce longer-run benefits entails a genuine “opportunity cost” to society. Benefits in excess of costs indicate that a program is a worthy expenditureof public funding from a financial perspective. An equivalent calculation can be made to determine whether the program produced a favorable “rate of return” on the investment.

If a cost-benefit accounting is not provided, it is vital to consider an order-of-magnitude estimate of the likely costs of recommended policy changes. Are costs per child or family likely to amount to $100, $1000, or $10,000? If services are required for several years to produce their effects, then per-year costs must be multiplied accordingly. If a program provides one-on-one or small-group services, it is likely to be more expensive to deliver. The level of professional training that is required of the service providers will also have a significant impact on cost.