RLF11 - Measuring Efficiency Required reading: RFL, Chapter...

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Measuring Efficiency Required reading: RFL, Chapter 11. You should also review (before reading this lecture) the last section of the sixth lecture titled “Case 11. Evaluating a Training Program on Stress Management for Intact Work Teams,” especially parts 7 and 8 where I discussed the benefit-cost ratio and ROI (return on investment) ratio. This chapter is about efficiency assessment . This is a new kind of thinking for many evaluators. Efficiency assessment involves going beyond knowledge (real or estimated) of program impact and attempting to determine how cost effective the program is at what it does and how it compares (in efficiency) to other programs, and then, given this knowledge, deciding whether the program is worth its costs and/or if the program should be replaced with another more efficient program . The key background assumption in efficiency assessment is that we live in a world of limited resources and we must make decisions about how to use and allocate those limited resources. Efficiency assessment is the approach to program evaluation usually taken by economists (as compared to other social scientists such as educators, psychologists, and sociologists). It is very important, however, that all evaluators (including you!) understand how to think about efficiency assessment because of the importance of costs and budgets and resource allocation in every organization. In RFL’s words, “perhaps the greatest value of efficiency analysis is that it forces us to think in a disciplined fashion about both costs and benefits.…Most other types of evaluation focus mainly on the benefits.” (p.367) We will discuss the two major types of efficiency analysis and assessment:
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Benefit-Cost Analysis and Assessment. Cost-effectiveness Analysis and Assessment. You will need to understand both of these approaches, the ways of thinking, and the related terminology. There is a nice list of related terminology on page 365 of the chapter. Benefit-Cost Analysis and Assessment In benefit-cost analysis , monetary (i.e., dollar) values are estimated for the resources used (i.e., costs) and for the program effects (i.e., benefits), and these two components (costs and benefits) are then compared to determine the worth of a program. In RFL’s words, benefit-cost analysis involves “determining the economic efficiency of a program, expressed as the relationship between cost and outcomes, usually measured in monetary terms .” Key Idea 1 : Benefit-cost analysis can be carried out according to different perspectives, and you will need to select a perspective when conducting a benefit-cost analysis . The major point is that the results of a benefit-cost analysis will vary according to the perspective taken. In some cases, the evaluator may wish to take more than one perspective for comparative purposes. Here are three common accounting perspectives : 1. 1. When using the individual or target perspective , the costs and benefits are listed that relate to the individuals in the
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This note was uploaded on 07/26/2011 for the course EDE 4942 taught by Professor Staff during the Spring '11 term at University of Florida.

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RLF11 - Measuring Efficiency Required reading: RFL, Chapter...

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