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Workshop Library

09/7/2023-
09/8/2023

Estimating Costs

The development of an accurate and thorough accounting of costs is essential to informing policy development and helping policymakers and the public understand the economic implications of policy options. Costs may reflect the adoption or application of alternative technologies, changes in production methods or product design, modifications to operating procedures, or the introduction of new procedures altogether, among other considerations. High-quality cost analyses must account for each of these factors. In addition, because costs depend on the characteristics of individual entities in the affected community, analysts must identify and account for these characteristics where appropriate.

The assessment of costs poses several conceptual and analytical challenges. Conceptually, analysts must determine which impacts represent a policy-related cost and which impacts, while potentially of interest to policymakers or the public, are not costs. For those impacts determined to be costs, the methods most appropriate for analysis can vary significantly across different cost categories. Thus, the analysis of costs for a single policy change may be a series of analyses, each applying different methods to estimate different categories of costs. This puts a significant burden on the analyst to understand the nuances of a range of analytic methods and to apply them appropriately across different regulatory contexts.

This workshop explores the conceptual foundations of cost analysis, analytic methods and tools for assessing costs, and best practices for applying these methods and communicating the results. These topics will be presented by a diverse group of practitioners and experts who have designed and conducted cost analyses in a variety of policy contexts for government agencies, non-governmental organizations, and other stakeholders. It is targeted on those interested in conducting these analyses and those interested in better understanding the strengths and limitations of analyses they review. The workshop itself will consist of presentations and case studies, with ample time set aside for discussion. 

Presenters:

• Jason Price, Industrial Economics (Organizer)
• Doug Meade, Inforum
• I-Ling Elaine Shen, South Coast Air Quality Management District
• Brad Wong, Mettalytics

07/11/2023-
07/12/2023

Valuing Nonmarket Benefits

The development of methods to estimate welfare changes for use in benefit-cost analysis began as a nascent field in the U.S. in the middle of the 20th century to support decision making for environmental investments. It then progressed as part of regulatory impact analyses required under multiple presidential executive orders beginning with EO 12291 issued by the Reagan administration. At the same time, the valuation of ecosystem services and natural capital throughout the European community expanded quickly with the U.K. Treasury “Green Book” and E.U. Water Framework Directive. Methodological improvements followed rapidly for both stated and revealed preference methods, leading to the now relatively mature set of methods available to practitioners.

These methods are being routinely applied to support benefit-cost analysis of regulatory programs, prioritization of conservation spending in government and non-governmental organizations, natural resource damage assessment, and private firm’s analyses of sustainability issues in their sector.

In this workshop, we provide a primer of the field including both the theoretical basis and current state of best practice for the most common methods. Core topics include basic welfare theory, stated preference methods, hedonic property value approaches, recreation demand modeling, hedonic wage studies, benefit transfer, the value of risk reduction, and other special topics. The workshop is intended for professionals and analysts who use the results of these studies in their work and wish to better understand the basics of these methods. The course should also serve as a refresher for those who have been away from the field and applications for some time and are looking for a brief review of the current state of the art.

Presenters:

• Cathy Kling, Cornell University (Organizer)
• Vic Adamowicz, University of Alberta
• Nic Kuminoff, Arizona State University
• Dan Phaneuf, University of Wisconsin
• Christian Vossler, University of Tennessee
• John Whitehead, Appalachian State University

06/15/2023-
06/16/2023

Estimating Program Effects

Estimates of the effects attributable to a program are critical to any effort to assess its benefits and costs. Making such estimates is complicated by the fact that while researchers can roll out a demonstration program and monitor progress, those observations are not enough; you also have to figure out what would have happened in the absence of the program. Furthermore, you have to be able to distinguish those effects caused by the program from
other general trends and changes. 

This workshop is led by three prominent program evaluators who have designed and implemented program evaluations around the world in the fields of healthcare, employment and training, education, water and sanitation, energy distribution, and disability policy. The workshop will draw on their direct experience as well as on what they and their colleagues learned over four decades at Mathematica, one of the preeminent research organizations in the world.

The goal of the workshop is to introduce program evaluation to people who want to get into this field or who use the findings from program evaluations to advise policymakers. The workshop will provide guidelines for producing strong and accurate estimates of program effects and cover many issues you won’t learn in school. It will start by discussing frameworks for conducting an evaluation and then give an overview of the most commonly used methods. It will then dig into the advantages and limitations of the various approaches, using results from prior evaluations to illustrate the issues. The discussion will pay particular attention to randomized control trials which are the strongest approach for attributing an observed effect to an intervention with a known degree of statistical precision. The workshop will close
with discussions of how to assess the validity and generalizability of the findings as well as ways to present the findings to decision makers so that they can understand both the core results and the associated level of uncertainty. 

Presenters:

• Craig Thornton
• Anu Rangarajan
• Randall Brown

05/23/2023-
05/25/2023

Economics of Addiction

Many people across the globe and in all walks of life suffer from addictions to harmful substances and
behaviors. Examples include addictions to alcohol, opioids, tobacco, gambling, and even social media. Public policies in response to the societal costs of addiction range from legal prohibitions, taxation, and regulations to prevent or reduce addiction, to harm reduction and treatment to help those suffering from addiction. The methods of benefit-cost analysis can help society make the difficult tradeoffs between these policy approaches. However, the nature of addictive behavior poses special challenges to benefit-cost analysis.

This workshop brings together experts to discuss the theory and practice of conducting benefit-cost analysis of policies and interventions to reduce the societal harm from addictions. The workshop will begin with an overview of economic theories of addiction, including the theory of rational addiction and behavioral economic theories of addiction. After reviewing market failures and other social purposes that justify addiction policy, the workshop will propose a framework for benefit-cost analysis. The second day will discuss worked examples including benefit-cost analyses of nutrition policy nudges, alcohol taxes, tobacco harm reduction regulations, and substance abuse treatment programs. 

This workshop is targeted towards benefit-cost analysis practitioners interested in conducting these analyses and
policymakers interested in better understanding the strengths and limitations of the analyses they review. Participants are expected to be familiar with the basic principles of benefit-cost analysis. The workshop itself will consist of a series of presentations and case studies, with ample time for questions and discussion.

Presenters:

• Elizabeth Botkins
• Aaron Kearsley
• Don Kenkel
  
• David Watkins

Benefit-Cost Analysis for Beginners

This short course provides an introduction for “beginners” who have not previously had formal instruction in benefit-cost analysis. It is designed to help those who encounter benefit-cost analysis to better understand its purpose and methods as well as those who are curious about how it might be useful in their work. Although some prior exposure to economics would be helpful, the workshop is designed to be accessible to a general audience. Upon completion of the workshop, attendees should have a clear understanding of the purpose, underlying concepts, strengths, and weaknesses of benefit-cost analysis.

The workshop will compare benefit-cost analysis to other analytical approaches commonly employed by policy analysts to put it into perspective. It will also introduce and explain a number of key benefit-cost analysis concepts including standing (whose costs and benefits count), incremental costs and benefits (clear alternatives to current policy), opportunity cost (what we give up to do the alternative), willingness to pay (how much people value the impacts of the alternative), “shadow prices” (monetizing impacts), discounting (taking account of the timing of costs and benefits), and sensitivity analysis (taking account of uncertainty). Several examples of benefit-cost analyses will be discussed to provide illustrations of concepts and facilitate discussion among attendees.

Presenters:

• Glenn C. Blomquist
• David L. Weimer

Valuing Time Savings in Low- and Middle-Income Countries

This workshop will expose participants to the theory and practice of incorporating changes in time use in benefit-cost analysis, with a focus on applications in low- and middle-income countries (LMICs). The instructors will highlight why cost-benefit and development practitioners and researchers should care about the value of time, and provide an overview of existing literature that has examined the value of time savings in LMIC settings.

The course will then discuss theoretical aspects related to time valuation, and describe approaches to measurement of time use, including sources for secondary data and primary data collection techniques including recent innovations. Time valuation approaches based on stated and revealed preference techniques will be considered, and will be demonstrated through applications in different sectors—e.g., water, energy, health and transportation. Finally, the course will provide best practices for benefit-transfer, and a framework for determining when benefit-transfer should be augmented with primary data collection. All through the workshop, limitations and gaps in current practice and understanding will be highlighted.

Presenters:

• Dale Whittington.
• Joseph Cook
• Marc Jeuland
  
• Maya Chandrasekaran

Benefit-Cost Analysis for U.S. Regulations co-sponsored by the Society for Risk Analysis (SRA)

Benefit-cost analysis is used around the world to assess regulatory impacts. This workshop introduces the use of Benefit-Cost Analysis for Regulatory Impact Analyses (RIAs) in the Federal government. The topics will include issues of identifying the market failure, establishing the correct baseline, choosing the policy options, estimating benefits, estimating costs, and identifying transfers. The focus will be on analyses of U.S. health, and safety regulations issued by the U.S. Department of Health and Human Services (HHS), with further examples from the U.S. Environmental Protection Agency (EPA) in the last two decades. The concepts and practices we'll discuss are equally applicable to analyses conducted in other policy areas and in other countries or at a sub-national level. The workshop will be structured as an overarching presentation with examples from past RIAs used as practical example to be discussed by the participants. This workshop is intended for both economists and other practitioners who have a working knowledge of Benefit-Cost Analysis and the general concept of measuring welfare effects. This working knowledge will then be applied to the Regulatory Impact Analysis context. The presenters are seasoned practitioners with substantial experience in conducting these analyses for federal regulatory actions. This workshop is intended for both economists and other practitioners who have a working knowledge of Benefit-Cost Analysis and the general concept of measuring welfare effects.

Presenters:

• Aliya Sassi
• Lizzi Quin
• Chris Dockins
• Charles Griffiths
• Aaron Kearsley

Benefit-Cost Analysis for Beginners

This short course will provide an introduction for 'beginners' who have not previously had formal instruction in BCA. It is designed to help those who encounter BCA to better understand its purpose and methods as well as those who are curious about how it might be useful in their work. Although some prior exposure to economics would be helpful, the workshop is designed to be accessible to a general audience. Upon completion of the workshop, attendees should have a clear understanding of the purpose, underlying concepts, strengths, and weaknesses of BCA.

The workshop will compare BCA to other analytical approaches commonly employed by policy analysts to put it into perspective. It will also introduce and explain a number of key BCA concepts including standing (whose costs and benefits count), incremental costs and benefits (clear alternatives to current policy), opportunity cost (what we give up to do the alternative), willingness to pay (how much people value the impacts of the alternative), 'shadow prices' (monetizing impacts), discounting (taking account of the timing of costs and benefits), and sensitivity analysis (taking account of uncertainty). Several examples of BCAs will be distributed prior to the workshop to provide illustrations of concepts and facilitate discussion among attendees.

Presenters:

• Glenn C. Blomquist
• David L. Weimer

Addressing Uncertainty in Regulatory Impact Analysis

Estimates of the costs and benefits of proposed regulations are inherently uncertain. To develop such estimates, analysts must construct models attempting to predict the future. They rely on information that may be subject to limitations related to the quality of the methods used to collect the data, and the extent to which the data address the same population, industries, or geographic areas as the regulation. The models also require many assumptions, such as how regulated entities will respond to the regulation and the likely future state of the world.

A critical challenge for analysts is to clearly describe the key sources of uncertainty associated with these estimates, in qualitative or quantitative terms. The goal is to ensure that decision-makers and other stakeholders understand the extent to which uncertainty – in data, models, and assumptions – affects the main analytic conclusions. A well-developed presentation of uncertainty can aid decision-makers in understanding the confidence they should have in the results and the magnitude of any bias.

This workshop brings together experts and practitioners with diverse perspectives to discuss the need for uncertainty analysis, along with basic concepts, commonly applied tools and methods, and best practices for communicating results. Some of the tools we will discuss include scenario analysis; Monte Carlo simulation; event trees, probability trees, decision trees; sensitivity analysis and break-even analysis; and expert elicitation. It is targeted on those interested in conducting these analyses and those interested in better understanding the strengths and limitations of analyses they review. Prior to the workshop, participants will receive a list of optional readings. The workshop itself will consist of a series of presentations and case studies, with ample time for discussion.

Presenters:

• Jennifer Baxter
• Dr. Robin Dillon-Merrill
• Aaron Kearsley

Benefit-Cost Analysis in Low- and Middle-Income Countries

This workshop addresses the use of benefit-cost analysis to evaluate policies for improving health and longevity in low- and middle-income countries. It builds on the Reference Case Guidelines for Benefit-Cost Analysis in Global Health and Development funded by the Bill & Melinda Gates Foundation. The workshop combines presentations with substantial opportunities for interaction and discussion, including case studies. It is designed for those with relatively little experience conducting or reviewing these analyses, although some familiarity with economic evaluation is desirable. Participants will develop an understanding of the fundamental concepts that underlie benefit-cost analysis, consider its advantages and limitations, explore its major components and what each should include, and gain familiarity with default estimates for valuing changes in time use and in health and longevity.

Presenters:

• Lisa A. Robinson
  
• Maureen Cropper
  
• James K. Hammitt 
• Dean Jamison 
• Mark Radin 
• Thomas Wilkinson 
• Dale Whittington 
• Brad Wong