Pew-MacArthur Results First Initiative Cost-Benefit Study

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In July 2013 the Pew-MacArthur Results First Initiative released a report analyzing the impact of cost-benefit analyses on legislation and its effect on policymaking. The report's conclusion was that while cost-benefit analyses do lead to better investments of public funds, most states have not yet applied the strategy to key policy decisions.

The Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation joined to form the Pew-MacArthur Results First Initiative. The joint project works to partner with states in implementing cost-benefit analysis models.[1]

Results

The study detailed four basic findings.

  • All states conducted cost-benefit analyses at least once between 2008 and 2011.
  • 29 states and the District of Columbia conducted at least some studies that evaluated multiple policy options for "making smarter investments of public dollars."[2]
  • 36 states reported that at least one of their cost-benefit analyses influenced policy decisions or debate.

10 best states

Map showing results of the Pew-MacArthur study.

According to the report, 10 states used cost-benefit analysis more than the rest of the states with respect to determining return on investment regarding state programs. In addition, these states were more likely to use cost-benefit analysis with respect to large budget areas and when making policy decisions. Those 10 states listed were:[2]

29 states with mixed results

Twenty-nine states and the District of Columbia had mixed results, using cost-benefit analyses but less effectively or consistently. Those 29 states were:[2]

11 worst states

Study authors found 11 states that made rare use of cost-benefit analyses in policy and budget debates. Those 11 states were:[2]

Commentary

Gary VanLandingham, director of the Pew-MacArthur Results First Initiative, issued the following quote when the study was released.

States that are committed to ensuring that taxpayer funds are spent effectively are turning to cost-benefit analysis. Many policymakers are looking for information that would allow them to target cuts more strategically, rather than make across-the-board reductions that treat effective and ineffective programs alike. Policy and spending choices should be based on evidence about what works and what does not. The bottom line is while the use of cost-benefit analysis is growing, states should be making wider and better use of this approach.[3]

—Gary VanLandingham, Pew Charitable Trusts, "New Report Finds Cost-Benefit Analyses Improve Budget Choices & Taxpayer Results," July 29, 2013

Methodology

For this report, the authors evaluated the states on three criteria:

  1. The number of cost-benefit studies released per year during the four-year study period.
  2. Whether these studies assessed multiple program options to compare policy solutions.
  3. Whether and the extent to which study findings influenced budget and policy decisions.

To determine states' use of cost-benefit analyses, report authors conducted a systematic search and assessment of state cost-benefit studies released between 2008 and 2011.

The Pew-MacArthur Results First Initiative attributes the following values to the impact cost-benefit analyses can have for state legislators.[2]

  • Systematically identify which programs work and which do not;
  • Calculate potential returns on investment of funding alternative programs;
  • Rank programs based on their projected benefits, costs, and investment risks;
  • Identify ineffective programs that could be targeted for cuts or elimination; and
  • Predict the impact of different policy options.

About Results First

The Pew-MacArthur Results First Initiative "works with states to implement an innovative cost-benefit analysis approach that helps them invest in policies and programs that are proven to work."[4] There are three basic questions the Initiative seeks to answer.

  1. Are states conducting cost-benefit analyses?
  2. Do they use the results when making policy and budget decisions?
  3. What challenges do states face in conducting and using these studies?

See also

External links

References