Cost-Benefit Analysis Toolkit

The CBKB cost-benefit analysis (CBA) toolkit is designed to help you understand and perform cost-benefit studies of criminal justice initiatives. The core set of tools focuses on the foundational elements of a CBA.

CBKB published a Cost-Benefit Analysis and Justice Policy Toolkit in December 2014, available here. At every step of the process, this publication provides clear and concise examples from CBAs conducted by state and local justice agencies in collaboration with Vera’s Cost-Benefit Analysis Unit in 2012 and 2013. For an overview of the steps involved in conducting a CBA, see the brief guide below.

To conduct a CBA of a justice system policy or program:

1. Determine whether a CBA is appropriate.

Review the Types of Economic Analysis tool for a comparison of the most common types of economic assessments: cost analysis, fiscal impact analysis, cost-effectiveness analysis, and CBA. Although CBA is the most comprehensive form of economic analysis, one of these other assessments may be more practical or sufficient for your needs.

2. Assess the impact of the initiative.

Does it work? What effect does it have on its intended objective, such as reducing recidivism or improving employment opportunities? If the initiative hasn’t been evaluated yet, has a similar initiative been examined? What does the existing research tell you?

View the CBKB webinar “Linking Evaluation and Cost-Benefit Analysis in Criminal Justice” for more information.

3. Measure the costs of the initiative.

What does it cost to launch and operate the policy or program?

The Taxpayer Costs tool will help you identify and measure justice system costs.

The Marginal Costs tool explains the importance of using marginal costs rather than average costs.

4. Measure the benefits of the initiative.

What is the dollar value of the initiative’s impact? Who does the program benefit? Criminal justice initiatives can affect many groups, including taxpayers, victims, and program participants. What is the magnitude of the economic benefits to each relevant group?

Read the Perspectives tool to learn how different groups benefit from criminal justice initiatives and whose perspectives should be considered in a CBA.

Learn how to translate the initiative’s impact into dollars with the Monetizing Benefits tool.

If the initiative reduces crime, it decreases victimization and its associated costs.  See the Victim Costs tool to learn how to place a monetary value on the benefits of avoided victimizations.

The benefits of social interventions often accrue over several years, so it’s important to determine the period of time your analysis will cover. The Time Horizons tool provides guidance for determining an appropriate time frame for CBA.

5. Compare costs and benefits.

Over the long term, do the benefits outweigh the costs? Does the initiative deliver higher or lower returns on investment than alternative options?

Use the Discounting tool to learn how and why to discount future benefits to the present.

Unsure if the numbers used in the analysis are accurate and how uncertain figures might affect the results? Refer to the Sensitivity Analysis tool to learn about addressing uncertainty in a CBA.

6. Reporting Results.

A number of metrics help communicate cost-benefit results. Refer to the Reporting Results tool to learn the most common measurements for presenting CBA findings.