Methodological nuances and pitfalls of benefit-cost analysis: a critique.
The recent paper by Hill, Banks, Handrich, Wehman, Hill, and Shafer, entitled "Benefit-Cost Analysis of Supported Competitive Employment for Persons with Mental Retardation" was critiqued. Concerns were of three types: logic, omission, and imprecision. Logically, Hill et al. incorrectly interchanged the concepts of cost-benefit ratio and net benefits; defined the taxpayer's perspective inconsistently; and appeared to double-adjust for inflation. Omissions included taxpayers' cost of paying benefits to workers from the regular labor force who were displaced by workers from the Hill et al. project; and certain costs and benefits when an individual changed from a minimally productive day program to an employment program. Finally, many cost and benefit estimates appeared to be extremely coarse, and to err in the direction of favoring benefits over costs. Most critically, Hill et al. reported their figures as absolutely true, when it would have been preferable to present a range of feasible cost and benefit estimates to test the sensitivity of their reported net benefit to reasonable variations in the values of its components. The ranges suggested by the present authors generally supported the conclusions of Hill et al., but reduced the certainty that taxpayers would benefit from their program.
Heal
L W
LW
University of Illinois at Urbana-Champaign.
McCaughrin
W B
WB
Tines
J J
JJ
D003362:Cost-Benefit Analysis; D004651:Employment; D005380:Financing, Government; D006801:Humans; D008607:Intellectual Disability / Q000534:rehabilitation*; D012050:Rehabilitation, Vocational / Q000191:economics*; D014481:United States