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Economic Evaluation in Education
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Economic Evaluation in Education
Cost-Effectiveness and Benefit-Cost Analysis

Third Edition


June 2017 | 376 pages | SAGE Publications, Inc

The past decade has seen increased attention to cost-effectiveness and benefit-cost analysis in education as administrators are being asked to accomplish more with the same or even fewer resources, philanthropists are keen to calculate their “return on investment” in social programs, and the general public is increasingly scrutinizing how resources are allocated to schools and colleges.

 

This text (titled Cost-Effectiveness Analysis in its previous editions) is the only full-length book to provide readers with the step-by-step methods they need to plan and implement a benefit-cost analysis in education. The authors examine a range of issues, including how to identify, measure, and distribute costs; how to measure effectiveness, utility, and benefits; and how to incorporate cost evaluations into the decision-making process. The updates to the Third Edition reflect the considerable methodological development in the evaluation literature, and the greater empiricism practiced by education researchers, to help readers learn to apply more advanced methods to their own analyses.


SAGE congratulates author Henry M. Levin, winner of the 2017 AERA Distinguished Contributions to Research in Education Award.
 
List of Tables, Figures, and Examples
 
Preface
 
Acknowledgments to the Second Edition
 
Acknowledgments to the Third Edition
 
About the Authors
 
Chapter 1. Introduction to Economic Evaluation
1.1. Purpose and Goals of the Book

 
1.2. The Importance of Economic Evaluations

 
1.3. Economic Evaluation for Decisionmaking in Education

 
1.4. Summary of Approaches to Economic Evaluation

 
1.5. Economic Evaluations and Policymaking

 
1.6. Outline of the Book

 
Discussion Questions

 
 
Chapter 2. Establishing an Analytic Framework
2.1. Identifying the Problem

 
2.2. Taking Account of the Audience and Perspective

 
2.3. Relating Economic Evaluation to the Theory of Change

 
2.4. Determining If Economic Evaluation Is Necessary

 
2.5. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 3. Cost Concepts
3.1. The Concept of Costs

 
3.2. Cost per Unit

 
3.3. Costs and the Theory of Change

 
3.4. Costs Data and Budgetary Information

 
3.5. Motivation for Cost Analysis

 
3.6. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 4. The Ingredients Method
4.1. Identifying Ingredients

 
4.2. Specifying Ingredients

 
4.3. Sources of Ingredients Information

 
4.4. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 5. Placing Values on Ingredients
5.1. Methods for Valuing Ingredients

 
5.2. Placing Dollar Values on Ingredients

 
5.3. Costs Over Multiple Years

 
5.4. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 6. Analyzing and Reporting Costs
6.1. Tabulating Total Cost Using a Cost Worksheet

 
6.2. Reporting Costs

 
6.3. Allocating Costs Among Constituencies

 
6.4. Analyzing Cost Determinants and Generalizing Costs

 
6.5. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 7. Effectiveness
7.1. Specifying Effectiveness

 
7.2. Methods for Identifying Effectiveness

 
7.3. Utility Analysis

 
7.4. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 8. Cost-Effectiveness Analysis
8.1. Cost-Effectiveness Ratios

 
8.2. Alternative Cost-Effectiveness Metrics

 
8.3. Interpreting Cost-Effectiveness Ratios

 
8.4. Explaining Cost-Effectiveness Ratios

 
8.5. Evidence on Cost-Effective Interventions

 
8.6. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 9. Estimating Benefits
9.1. The Concept of Benefits

 
9.2. Specifying Benefits

 
9.3. Valuing Educational Benefits Through Earnings

 
9.4. Valuing Educational Benefits Through Shadow Pricing

 
9.5. Applying Benefits in Benefit-Cost Analysis

 
9.6. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 10. Benefit-Cost Analysis
10.1. Combining Benefits and Costs Into Economic Metrics

 
10.2. Performing Benefit-Cost Analysis

 
10.3. Examples of Benefit-Cost Analysis

 
10.4. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 11. Accounting for Uncertainty
11.1. Type of Uncertainty and Sensitivity

 
11.2. General Sensitivity Testing

 
11.3. Sensitivity Testing of Cost Estimates

 
11.4. Sensitivity Testing of Cost-Effectiveness

 
11.5. Sensitivity Testing of Benefit-Cost Analysis

 
11.6. Distributional Issues

 
11.7. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 12. Checklist for Economic Evaluations
12.1. A Checklist for Appraising Economic Evaluations

 
12.2. Appraising Economic Evaluations

 
12.3. Conclusions

 
Discussion Questions

 
Exercises

 
 
Chapter 13. Economic Evaluations for Education Policy
13.1. Applying Economic Analysis

 
13.2. Expanding the Use of Economic Evaluation

 
13.3. Decisionmaking and Economic Evaluation

 
13.4. Prioritizing Educational Investments

 
13.5. Using Economic Evaluations to Improve Education Research

 
13.6. The Future of Economic Evaluation of Education

 
13.7. A Final Word

 
Discussion Questions

 
 
Appendix A. Answers to Even-Numbered Exercises
 
Appendix B. CostOut Tool
 
References
 
Index

“In order to improve our educational systems, we need to increase our understanding of economic evaluation. This text provides the tools for both practitioners and researchers to achieve this end. This is unequivocally the best text in the field.”

Dan Jorgensen
University of Denver

“This is a practical and clear text that practitioners can use. The authors make a strong case for the importance of economic evaluations and then provide coherent, sequential, and precise steps for conducting economic evaluations. This is a must-use for any policy methods class.”

Charol Shakeshaft
Virginia Commonwealth University

“Clear and effective representation of a valuable approach to cost analysis offered by authorities in the field.”

Charles David Crumpton
University of Maryland

This text offers evaluators a rare opportunity to enhance the effectiveness and utility of their work: Policymakers need information on programs’ effects and their costs if they are to make informed decisions. This text clearly teaches both the ‘how’ and ‘why’ of economic evaluation.

Gary Skolits
University of Tennessee

"Sound policymaking requires not just a knowledge of “what works”, but also an understanding of whether the benefits exceed the costs. This volume presents, in a clear and accessible manner, all of the tools essential to making this determination. It’s an excellent resource for policy students and policymakers alike."

David Figlio
School of Education and Social Policy, Northwestern University

Policymakers around the world face the challenge of how to use scarce resources to most effectively improve education.  Researchers are supporting their efforts by providing increasingly good evidence on the impacts of a wide range of policy initiatives such as reducing class size, introducing new instructional technologies, and basing teacher compensation on student performance. But since these initiatives have different costs, policymakers find it difficult to use the research evidence.  The third edition of Economic Evaluation in Education by Henry Levin and his colleagues provides a valuable resource to researchers who want to make evidence from impact evaluations useful to policymakers.  Topics include methods for estimating the costs stemming from initiatives and strategies to compare the cost effectiveness of initiatives with similar objectives.  Material new to this third edition includes an expanded description of how to estimate the dollar value of diverse outcomes of education and treatment of different kinds of uncertainty.  One strength of the book is the lucid application of up-to-date economics methods to concrete challenges in estimating costs and evaluating benefits.  A second is the variety of examples used to illustrate application of methods.  A third is the set of discussion questions and exercises at the end of each chapter.  These strengths make the book a wise choice as a text in Master’s level courses on making research useful to policymakers.

Richard J. Murnane
Harvard Graduate School of Education

Sample Materials & Chapters

Chapter 7

Chapter 10


Henry M. Levin

Henry M. Levin is the Director of the Center for Benefit Cost Studies in Education, the William H. Kilpatrick Professor of Economics and Education at Teachers College, Columbia University, and the David Jacks Professor of Higher Education and Economics, Emeritus, at Stanford University.  He has been engaged in cost-effectiveness and benefit-cost studies in education and other fields since 1970.  He is the author of 22 books and about 300 scholarly articles on these topics as well as others in the economics of education and educational policy. More About Author

Patrick J. McEwan

Patrick J. McEwan is a Professor of Economics at Wellesley College and the Director of Latin American Studies at Wellesley College. His research interests include the impact and cost evaluation of education and social policy in Latin America, especially Chile and Honduras. His work has been published in the American Economic Review, the Journal of Public Economics, Educational Evaluation and Policy Analysis, and other journals of economics and education policy. For more information on his research, visit www.patrickmcewan.net. More About Author

Clive R. Belfield

Clive R. Belfield is a Professor in the Department of Economics at Queens College, City University of New York. He is also Principal Economist at the Center for Benefit-Cost Studies in Education at Teachers College, Columbia University, Faculty Member for The Evaluators’ Institute at Claremont Graduate University, and a Research Affiliate at the Community College Research Center, Teachers College, Columbia University. He received his Ph.D. in Economics from the University of Exeter, England. His research interests are economic evaluation of education programs. He has authored three books and over 75 articles in the field of the Economics... More About Author

Alyshia Brooks Bowden

A. Brooks Bowden is an Assistant Professor of Methods and Policy in the Educational Leadership, Policy, and Human Development Department at North Carolina State University. She is the Director of Training and Associate Director at the Center for Benefit-Cost Studies of Education at Teachers College, Columbia University. She received her Ph.D. in Education Policy with a specialization in Economics from Columbia University. She specializes in program evaluation and economic analysis, focusing on applications and methodology of the ingredients method of cost analysis. She recently co-authored publications for the American Journal of... More About Author

Robert Douglas Shand

Robert D. Shand is the Novice G. Fawcett postdoctoral researcher in educational studies at The Ohio State University. He completed his Ph.D. in Economics and Education at Teachers College, Columbia University. As a former K-12 teacher, his research focuses on how educational practitioners use evidence on effectiveness and costs to improve decision-making and how teachers improve over time through formal training and learning from colleagues. More About Author

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