ACCESS / TOOLS: QUANTITATIVE (A/TQ)
Economics
Benefit-Cost Analysis and related tools
are valuable for aids to judgment. As such they are valuable for comparisons of
alternatives and for questioning conventional wisdom, (raised in
quality/tools:quantitative) and for
opening new perspective. But they are too often used as decision tools,
to replace judgment.
Cost-effectiveness analysis, compares alternative programs in terms of
relative efficiency in meeting a specific goal. It allows comparison
without
requiring the estimate of the value (say in terms of dollars) of the
goal
(e.g. lives saved). But, like benefit-cost analysis, it should be used
to
sharpen judgment rather than to replace it, because the analysis
typically
omits considerations (e.g. relative importance of age distribution of
lives
saved) and presumes an unreasonable certainty of quantitative estimates
(e.g. number of lives saved). Because it focuses upon the best use of
available funds, it also tends to ignore, or even evade, the question
of whether there is need for substantial change in funds allocated to a
purpose. See, for example, the challenging story of Dr. Paul Farmer in Mountains Beyond Mountains
by Tracy Kidder (2003).
Marginal costs and opportunity costs are other economic concepts of
value in analyzing and comparing alternative programs