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Valuing benefits: What value are we trying to capture? webinar, 25 January 2018

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Valuing benefits: What value are we trying to capture? webinar
Thursday 25 January 2018

presented by Tim Goodspeed, morethanoutputs, Social value consultancy
hosted by Merv Wyeth, Benefits Management SIG Secretary

The link to the write up page and resources of this webinar:
https://www.apm.org.uk/news/valuing-benefits-what-value-are-we-trying-to-capture-webinar/

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Valuing benefits: What value are we trying to capture? webinar, 25 January 2018

  1. 1. Valuing Benefits What value are we trying to capture?
  2. 2. 2 Tim Goodspeed, morethanoutputs SROI Practitioner, accredited by
  3. 3. 3 WHY? HOW? • Common purposes for valuation • Approaches that include valuation • Valuation techniques
  4. 4. What value are we trying to capture? There’s lots of different types of value: – Financial Value – Economic Value – Fiscal Value – Environmental Value – Social Value
  5. 5. Qty 40 60 60 In a service - example Rights and Allowances advice for older people Outcome +/- Improved Health + Increased Allowances + Less Isolation + Value Total Value 20 + 800 10 + 600 85 +5100 + 6500 • If we don’t ask an open question about all changes • If we don’t ask about value
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  7. 7. Value 7 How much would you pay for a nice new iPhone?
  8. 8. 8
  9. 9. Qty 40 60 60 In a service - example Rights and Allowances advice for older people Outcome +/- Improved Health + Increased Allowances + Less Isolation + Value Total Value 20 + 800 10 + 600 85 +5100 + 6500 Value Total Value £200 £8,000 £100 £6,000 £850 £51,000 £65,000
  10. 10. Why? Technical 10 • To include benefits on a level playing field with costs and financial information; to better inform (balance) decisions • To compare benefits with a common unit
  11. 11. Why? Purpose and Decisions 11 What do you think?
  12. 12. Why? Purpose and Decisions 12 Purpose Audience Rigour Justify funding and investment External High Promote or publicise benefits better Internal/External Medium Deliver benefits that meet end users’ priorities Internal Low Cost Benefit Analysis Prove? Social Return on Investment Improve?
  13. 13. Objectives Monitoring Objectives Outcomes Intended
  14. 14. Unintended +ve Unintended -ve Objectives Benefit Evaluation Outcomes IntendedActivities
  15. 15. Unintended +ve Unintended -ve Objectives Social Return on Investment Framework for deciding on important outcomes: - Quantity - Duration - Value - Causality Outcomes IntendedActivities
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  17. 17. Prioritisation 50% 40% 10% 80% 20% 10% 50% 40% 50% 50% 1,000 500 400 100 50 250 200 50 100% 80% 20% 100% 100% 100% 100% 100% 160 40 160 40 80 320 80 320320 50 50 [Source: Judge Matharu]
  18. 18. Valuation - methods • Cost-related methods – Changes in money – Changes in resource availability • Value-based methods – Stated preference • Contingent valuation – willingness to pay – Willing to accept • Choice modelling – Revealed preference – Life satisfaction
  19. 19. Value Price Cost Market Place Values [Source: Peter Scholten]
  20. 20. Financial Proxies Consider independence of older people as an benefit. What we really need is a market for independence, full of transactions, that we can compare and see the value of independence to customers (what they will pay for it). There is no such market. So one way to approach this is to think what else people buy that could give them independence.
  21. 21. SROI Example: Wheels-to-Meals’ story of change Value of independence: • Less spent on home help, 4 weeks costs (£1,260) But notice, in Wheels-to-Meals, the benefit was a story that led to more than independence alone: … and so residents avoided pain and anxiety and maintained independence and dignity So we have more to do
  22. 22. SROI Example: Wheels-to-Meals’ story of change In this example, the financial proxy • Less spent on home help, 4 weeks costs (£1,260) reflects the independence of residents being able to stay in their homes. It does not represent anything of the dignity maintained by not being in care (hospital and at home recovering), or the pain and anxiety associated with a fall that is also avoided.
  23. 23. SROI Example: Wheels-to-Meals’ story of change Put the following in order of preference to have: a) A yr’s subscription to your favourite magazine b) A new car c) Maintained dignity d) New shoes e) Your annual holiday f) Free electricity for a year Put the following in order of preference to have: a) A yr’s subscription to your favourite magazine £65 b) A new car £21,375 (£7,125 a year) c) Maintained dignity d) New shoes £30 (£60 a year) e) Your annual holiday £4,300 f) Free electricity for a year £1,850 Put the following in order of preference to have: a) A yr’s subscription to your favourite magazine b) A new car c) Maintained dignity d) New shoes e) Your annual holiday f) Free electricity for a year
  24. 24. SROI Example: Wheels-to-Meals’ story of change The data showed the top 3 were: 1. A new car £21,375 (£7,125 a year) 2. Maintained dignity 3. Your annual holiday £4,300 So, for dignity, Wheels-to-Meals used a value derived from a value game: Stakeholder defined relative value (between £4,300 -£7,125. £4,300 used)
  25. 25. Values for people: Contingent valuation - WTP Int J Health Care Finance Econ. 2013 Dec;13(3-4):233-45. doi: 10.1007/s10754-013-9129-2. Epub 2013 Aug 31. Willingness-to-pay to prevent Alzheimer's disease: a contingent valuation approach. Basu R. As the prevalence of Alzheimer's disease (AD) increases, the need to develop effective and well- tolerated pharmacotherapies for the prevention of AD is becoming increasingly important. Understanding determinants and magnitudes of individuals' preferences for AD prevention programs is important while estimating the benefits of any new pharmacological intervention that targets the prevention of the disease. This paper applied contingent valuation, a method frequently used for economic valuation of goods or services not transacted in the markets, to estimate the willingness-to- pay (WTP) to prevent AD based on the nationally representative Health and Retirement Survey data. The WTP was associated in predictable ways with respondent characteristics. The mean estimated WTP for preventing AD is $155 per month (95 % CI $153-$157) based on interval regression. On average, a higher WTP for the prescription drug for AD prevention was reported by respondents with higher perceived risks, and greater household wealth. The findings provide useful information about determinants and the magnitude of individuals' preferences for AD prevention drugs for healthcare payers and individual families while making decisions to prevent AD.
  26. 26. 26
  27. 27. Discrete Choice Experiments 27
  28. 28. New methods for measuring value: Wellbeing valuation (WV) approach • Usually use a global measure of wellbeing such as life satisfaction (LS). Example • Living in a safe area increases LS by 1 index point. • What is increase in income needed to also increase LS by 1 point? (£ 2,000) • Then the value of living in a safe area = £ 2,000 Wellbeing Money Policy / Intervention [Source: Daniel Fujiwara]
  29. 29. What’s available? AUDIENCE CREDIBILITY REALITY • Government academic published research • Statistically analysed • Large sample size • Higher rigour • national average? • Asking a few questions • Making some common sense judgements, and be transparent • Small sample size • Lower rigour • YOUR END USERS!!
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  31. 31. Were Always Above Average Still Below Average The Average Moved Different people, different needs
  32. 32. What value? 1. Be clear whose definition of benefits you want to value (scope and results) 2. Use values and techniques they recognise 3. Be proportionate - good enough for the decision 34 Tim Goodspeed morethanoutputs Tim.Goodspeed@BTInternet.com +44 (07714 136176 @TimGoodspeed www.linkedin.com/in/tim-goodspeed-social-value
  33. 33. This presentation was delivered at an APM webinar To find out more about upcoming webinars please visit our website www.apm.org.uk/events

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