Cost-benefit analysis and costeffectiveness analysis

Introduction Cost-benefit analysis (CBA) and Cost-effectiveness analysis (CEA) are two specific methodologies that aim to provide guidance on how to best allocate scarce resources across potential interventions or investments (Petitti 1999, Boardman et al. 2011). The underlying motivation for such methods is to make social decision-making more rational, that is, to offer recommendations to policy-makers on how to more efficiently achieve beneficial outcomes for society as a whole. Here the efficiency concept is an economic one, which simply defined means that nothing more can be achieved for society given the resources available. Thus, these tools do not consider interests from a private perspective, but rather more appropriately emphasize the social (economic) efficiency of programs or policies.

Duke Scholars

Author Marc A. Jeuland Sanford School of Public Policy