Cost-Benefit Analysis for Juvenile Programs

• NCJ Number: 197881
• Author(s): Steve Aos; Francesca Garcia Lanier
• Editor(s): Stan Orchowsky
• Date Published: May 2002
• Length: 16 pages
• Grant Number(s): 98-RN-FX-0112
• Sponsoring Agency: Office of Juvenile Justice and Delinquency Prevention (OJJDP)
• Corporate Author: Juvenile Justice Evaluation Ctr
• Sale Source: Juvenile Justice Evaluation Ctr
• Publication Format: Document
• Publication Type: Legislation/Policy Analysis
• Language: English
• Country: United States of America
• Note: Program Evaluation Briefing Series #4.

Annotation

This document examines how formal cost-benefit analysis can aid in informal decisions about certain aspects of the criminal justice system.

Abstract

Cost-benefit analysis is a formal way of adding up the advantages and disadvantages of doing one thing as opposed to another. Cost-benefit information can assist decision-makers in more efficiently allocating scarce public resources among competing demands. A good program evaluation should be able to answer the fundamental question of whether or not a program works. A good cost-benefit analysis should be able to take the answer to this question one step further by asking if the dollar value of a program’s demonstrated level of success exceeds the cost of the program. A cost-benefit analysis of a criminal justice program should involve five steps. The first step is to add up the monetary benefits. The second step is to subtract the costs. The third step is to see if the resulting bottom line, expressed in dollar terms, is positive or negative. The fourth step is to compare the estimated bottom line to the returns available from other options. The fifth step is to test the riskiness of the conclusions. The most difficult step is the first step of quantifying the benefits in dollar terms. The issues that must be considered in order to answer this question are to whom do the benefits go, the dollar value, the long run, and the marginal costs. There are two types of costs associated with programs: capital costs and operating costs. A full accounting of the costs associated with a program will include both. The products of the first two steps of a cost-benefit analysis can be combined to produce standard economic statistics that summarize the relative costs and benefits of programs. This cost-benefit analysis provides a framework to synthesize program evaluation information and arrive at economic “bottom-line” measures for some of these choices. This information can be used by decision-makers to choose courses of action that have the best chance of producing favorable returns on taxpayer dollars.