• • Placing economics into evaluation practice via the four types of economic evaluation

• • Simple economic evaluations looking at cost description and cost minimisation

• • Cost-effectiveness and cost avoidance approaches in evaluation

• • Cost-utility evaluations

• • Cost-benefit evaluations

• • Using sensitivity analysis to strengthen economic evaluation

• • Avoiding common pitfalls in economic evaluation

Introduction

A well-designed process (or impact) evaluation can show accountabilities and how well a policy has worked against expectations, but it will not demonstrate objectively whether the outputs and outcomes justified the funding or investment that went into it in the first place. Economic evaluations look precisely at those issues, including whether or to what extent those costs were outweighed by the benefits. Not all economic evaluations will be specialist, standalone affairs, and they can be combined with a process or impact evaluation to pay some attention to the resources expected to be used in an intervention, as well as their costs and how these relate to the benefits arising. More sophisticated needs such as cost-benefit associations are not without their critics, and harnessing the most appropriate approaches will need specialist, standalone designs if their findings are to be credible and useful.

Understanding the economic perspective

Economic evaluation is about much more than reducing the inputs, outputs and outcomes of an intervention to numbers and into money values (monetisation). A well-balanced economic evaluation goes beyond numbers to critically review the often unconscious assumptions and choices made in setting up interventions and delivering them. It also draws attention to the fact that the funding and resources committed to an intervention could be allocated to other things, and the true costs (direct and indirect) and value, often need to be understood if judgements are to be made about future investment. In the modern world, this may loom large where decision makers are juggling multiple priorities and scarce resources.

A starting point to conducting economic evaluation that can cast light on these wider issues is an understanding of some of the deeper principles that underlie economic evaluation. Economic evaluation may be a highly quantified process but one where reducing inputs/outputs and outcomes to numbers is itself almost always value-laden, and needs to allow for seen and unseen effects.