This document discusses cost-benefit analysis (CBA) and its application to criminal justice policy and practice. CBA is a tool that helps determine if a program is cost-effective and generates cost savings. It assists policymakers in identifying cost-effective programs and service providers in demonstrating economic benefits. Conducting a CBA involves 5 steps - evaluating the program, considering perspective, measuring costs, measuring benefits in dollars, and comparing costs and benefits. The document provides examples of CBA applications and how to monetize justice system, victim, employment, and other benefits. Resources for learning more about and getting started with CBA are also listed.

1. Informing Criminal Justice Policy and
Practice through Cost-Benefit Analysis
Tina Chiu | Director of Technical Assistance
Valerie Levshin | Policy Analyst, Cost-Benefit Analysis Unit
August 3, 2010

2. Vera Institute of Justice
Making justice systems fairer and more
effective through research and innovation
• Independent, nonprofit organization
• Technical assistance, research and
demonstration projects
• Criminal and juvenile justice

3. Cost-Benefit Analysis Unit
• Provides general information and
training on CBA
• Conducts CBA studies
• Advances knowledge and practice
• Connects interested stakeholders
• Helps others develop capacity

4. What is Cost-Benefit Analysis?

5. What is cost-benefit analysis (CBA)?
 A tool that helps determine:
 Is this program cost-effective?
 How much does this program generate
in cost-savings?
 Which program will provide the greatest
value for my money?

6. What is cost-benefit analysis (CBA)?
 Assists policymakers and funders in
identifying cost-effective programs
 Assists service providers in
demonstrating the economic benefit
of their programs

7. Examples of CBA Application
 Examine new prison construction
 Identify alternatives to incarceration
 Evaluate raising the age of juvenile
jurisdiction
 Assess the cost-effectiveness of IT
initiatives

8. Conducting
a cost-benefit analysis

9. CBA in 5 steps
1) Evaluate the program
2) Consider the perspective
3) Measure costs
4) Measure benefits – in dollars
5) Compare costs and benefits

10. Example: an employment program for the
formerly incarcerated
Costs Benefits
• Job coaching • Less spending on the justice
system (prisons, jails, courts,
• Support services
police)
• Payments to
participants • Fewer victims
• Higher employment rates
• Healthier and more productive
program participants
• Stronger communities
Which side is greater?

11. Monetizing benefits: justice system
cost of crime to New York justice
agencies that operate jails, prisons,
police, courts & community supervision
x
number of crimes the program
prevents
=
savings to the justice system

12. Monetizing benefits: justice system
• Marginal costs reflect actual cost-savings
• Magnitude of the marginal costs depends
on the policy’s impact on the system
• Several approaches:
1) Regression analysis
2) Government agencies’ estimates
3) Capacity reductions
4) Budget review

13. Monetizing benefits: victims
• Tangible
cost of crime to victims • Intangible
x
number of crimes the program prevents
=
savings to victims

14. Monetizing benefits: employment
Income tax
+
Labor output
=
benefit to taxpayers from employment
gains

15. Monetizing benefits: other
Monetizing benefits to participants,
communities, and society can be difficult
• Need reliable evidence
• Need to limit assumptions

16. Other economic assessments
Cost-Effectiveness Analysis
• How do the outcomes compare to the costs?
Cost-Analysis
• How much does the thing cost?
• Which option costs less?

17. What can you do to get started?
• Collect data
• Program costs
• Program outcomes
• Identify internal/external analysts
• Financial analysts
• Researchers
• Review the literature
• CBA’s of similar programs

18. Resources
Justice Research and Statistics Association
• CBA workshop, October 26 in Portland, ME
Washington State Institute for Public Policy
• Publications at http://www.wsipp.wa.gov/
Pew Center on the States
• Delivering Results initiative
• Technical assistance to states

19. More Resources
Urban Institute
• Crime and Justice CBA studies
• District of Columbia Crime Policy Institute, in
partnership with The Brookings Institution
Society for Benefit-Cost Analysis
• Evidence and the “NEW” Policy Evaluation
conference, October 18-19 in Washington, D.C.
• Journal of Benefit-Cost Analysis
• http://benefitcostanalysis.org/

20. Cost-Benefit Knowledge Bank
• Funded by the Bureau of Justice Assistance
• Follow us on @CBKBank
• Website
• CBA Toolkit
• Snapshots of CBA Literature
• Roundtable Discussions
• Podcasts, Videocasts, and Webinars
• Community of Practice

21. For more info
• Tina Chiu
tchiu@vera.org
(212) 376-3038
• Valerie Levshin
vlevshin@vera.org
(212) 376-3062
• http://www.vera.org/cba