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/ Twitter #apmbenefits @apmbmsig

1. Valuing Benefits
What value are we
trying to capture?

2. 2
Tim Goodspeed, morethanoutputs
SROI Practitioner, accredited by

3. 3
WHY?
HOW?
• Common purposes for valuation
• Approaches that include valuation
• Valuation techniques

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. 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

6. 6

7. Value
7
How much would you pay for a
nice new iPhone?

8. 8

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. 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. Why? Purpose and Decisions
11
What do you think?

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. Objectives
Monitoring Objectives
Outcomes Intended

14. Unintended +ve
Unintended -ve
Objectives
Benefit Evaluation
Outcomes IntendedActivities

15. Unintended +ve
Unintended -ve
Objectives
Social Return on Investment
Framework for
deciding on
important
outcomes:
- Quantity
- Duration
- Value
- Causality
Outcomes IntendedActivities

16. 16

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. 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. Value
Price
Cost
Market Place Values
[Source: Peter Scholten]

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. 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. 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. 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. 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. 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

27. Discrete Choice Experiments
27

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. 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!!

30. 30

31. Were Always
Above Average
Still Below
Average
The Average
Moved
Different people, different needs

34. 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

35. This presentation was delivered
at an APM webinar
To find out more about
upcoming webinars please visit
our website
www.apm.org.uk/events