The Efficiency Potential in Social Programs: Accounting for Heterogeneity in Benefit-Cost Analysis 1

Nicolai Kristensen, Christophe Kolodziejczyk, Iben Bolvig and Kurt Houlberg

Journal of Benefit-Cost Analysis, 2017, vol. 8, issue 1, 1-23

Abstract: Traditionally, benefit-cost analyses focus on average benefits and average costs. However, heterogeneous treatment effects and/or costs are most often present, which means that there is an efficiency potential hidden in the implementation of public programs, if policies can be targeted at those who, net of costs, benefit the most. We introduce efficiency potential defined as the ratio between the net benefit achieved under perfect selection of the individuals with significant positive net benefit of program participation, and the actually realized benefits net of costs. Using data from a randomized control-trial experiment of a Danish return-to-work program combined with rich administrative records and survey data, we find that there is indeed a potential for increased efficiency. Results from the treatment literature indicate that, generally, it may be difficult to harvest the full potential. Our application corroborates this finding.

Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:jbcoan:v:8:y:2017:i:01:p:1-23_00

Access Statistics for this article

More articles in Journal of Benefit-Cost Analysis from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().