It bears repeating: Marginal costs matter.

By , April 10, 2013

This spring CBKB will publish A Guide to Calculating Justice-System Marginal Costs. Primarily a “how-to” technical guide for analysts, the publication is also intended to inform policymakers who have an interest in the costs and benefits of criminal justice initiatives. (Note: We published the guide in May.)

This won’t be the first time CBKB has addressed marginal costs. Our Marginal Costs tool and webinar on estimating marginal costs both provide an overview of the topic and laid the groundwork for the upcoming guide. So why come up with another resource on this subject?

First, it’s the most detailed publication we’ve created on this topic. The guide explains, step by step, how to calculate marginal costs for corrections, community corrections, courts, and law enforcement. It also provides sample calculations and references to data sources, and explains when and why analysts should rely on marginal costs and not average costs in cost-benefit calculations.

Second, it would be difficult to exaggerate the importance of using accurate inputs in cost-benefit analysis (CBA), especially because policymakers look to cost-benefit studies to understand the budgetary implications of justice initiatives. If someone uses average costs instead of marginal costs in CBA calculations, the costs of the program or policy change will usually be overestimated—and benefits may also be inflated. Average costs include fixed costs that do not change in response to a small increase or decrease in output. Marginal costs, on the other hand, represent the amount of change in total cost when output (such as arrests, court filings, or jail intakes) changes because of a policy or program.

We encourage you to sign up for our e-mail alerts (under “Subscribe” in the right-hand column), in part so we can let you know when we publish the marginal costs guide and other new materials. Also coming soon: our publications about building CBA capacity and on the intersection of CBA and public-safety technologies. As always, we welcome your comments on Twitter or Facebook, or by e-mailing us at cbkb@cbkb.org.

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