Want better government? Use cost-benefit analysis

Non-profits are working with state governments to increase use of cost-benefit analyses to learn whether programs and policies are worth it.

If you’re trying to design a government program, say, to educate kids or reduce crime, you’d want it to actually work, right? There are now ways for policymakers to get a better handle on what’s effective and what’s not. A new report from the Pew-MacArthur Results First Initiative looks at how states are using cost-benefit analysis to guide public policy.

To figure out what works, the initiative is partnering with researchers like Steve Aos, the director of the Washington State Institute for Public Policy.

“The role that’s assigned to the institute by the legislature in effect is that of an investment advisor,” Aos says.

Washington’s legislature set up the institute nearly 30-years-ago. The goal is to gather all the best data available, determine what policies work best, and figure out how much lawmakers could save taxpayers by adopting them.

Take, for example, crime prevention programs, like drug courts or group therapy for offenders. 

“We can rank all the options by return on investment,” Aos says. “Where do we get the biggest crime-reducing bang for the taxpayers’ bucks?”

That’s increasingly important as states face tight budgets, says Gary Vanlandingham.

Vanlandingham is the director of the Results First Initiative. Its goal is to help states use cost-benefit analysis to make smarter decisions about everything from mental health treatment to transportation. The analysis is tailored to each state.

“Because every state is different,” Vanlandingham says. “A program which will have a certain amount of impact may have more impact in one state than another simply because of the people who will be served by the program.”

The Pew-MacArthur study finds that all 50 states and the District of Columbia did some kind of cost-benefit analysis between 2008 and 2011. But only 36 states actually used some of that information to shape public policy decisions. 

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