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Advancing the Quality of Cost-Benefit Analysis for Justice Programs

NCJ Number
Carl Matthies
Date Published
March 2014
52 pages
This white paper identifies and discusses the main methodological challenges in performing cost-benefit analyses (CBAs) of justice-system investments, based largely on input from the Cost-Benefits Methods Working Group convened by the Vera Institute of Justice in 2012.
Whereas other forms of economic analysis, such as fiscal-impact studies, typically adopt the narrow perspective of a single government agency, CBA focuses on capturing the costs and benefits to all parties impacted by the policy being examined. This means including not only the perspectives of organized stakeholders, but also of all relevant members of society, so as to provide a complete appreciation of the policy's impact. The first section of this paper provides some background on perspectives, including the perspectives typically included in justice-related CBAs, and it explains how to select the perspectives to include in a CBA. Section 2 addresses the evaluation component of CBA, i.e., predicting or measuring program impacts. CBA uses evaluation as an empirical basis for assessing the impacts, both beneficial and detrimental, of a program. These effects are then converted into dollar amounts in determining the program's net value. Section 3 focuses on valuing the costs and impacts of justice policies and programs. This section includes a discussion about estimating the costs of implementing a justice policy or program and then focuses on valuing the impacts on taxpayers, victims, offenders, and the rest of society. Section 4 considers how to deal with uncertainty in impacts. It presents an overview of sensitivity analysis and describes four types: partial sensitivity analysis, best-case and worst-case scenarios, break-even analysis, and Monte Carlo analysis. Section 5 discusses how to make CBAs clearer and more accessible. In a concluding comment, the author advises that, "even if not all costs and benefits can be adequately evaluated, going through the disciplined thought process of conducting a CBA can yield useful information and insights to aid in the decisionmaking process." 17 figures and appended discussion of regression analysis