Benefit-Cost Analysis of Communities That Care: Social Policy Implications in Washington State

Introduction: Social policies increasingly consider the economic implications of various policy alternatives. In Washington state, E2SHB 2536, passed in 2012, mandated that “prevention and intervention services delivered to children and juveniles in the areas of mental health, child welfare, and juvenile justice be primarily evidence-based and research-based.” The Washington State Institute for Public Policy (WSIPP) and the University of Washington Evidence-Based Practice Institute, both independent bodies, were subsequently asked by the legislature to create an inventory of evidence-based interventions that met criteria for receiving legislative funding and support. To receive the most favorable “evidence-based” designation, programs needed to generate positive net present value when subjected to benefit-cost analysis (BCA), among other criteria. In this presentation, we examine the policy from the lens of one evidence-based program included in the inventory, Communities That Care (CTC). CTC is a coalition-based prevention system shown in a rigorous community-randomized trial to have sustained preventive effects through Grade 12 on youth delinquency and substance use. CTC has also been subjected to a BCA with the Washington State Institute for Public Policy (WSIPP) BCA software tool that was used to evaluate programs for inclusion in the E2SHB inventory.  The tool can monetize benefits across a number of policy and program areas, incorporates Monte Carlo methods for capturing uncertainty, and produces several policy-relevant outcomes, including net present value, costs and benefits to various stakeholders, investment risk, and cash flows. Using CTC as a case study, this presentation shows how substance use and delinquency outcomes are monetized under the model. It also illustrates the sensitivity of benefit-cost conclusions to certain assumptions.

Method: A BCA of CTC’s significant intervention effects on delinquency, alcohol use, and tobacco use initiation at Grade 12 was conducted using the WSIPP BCA software tool. In this study, we (1) overview the model’s benefits valuation methodology, and (2) vary several assumptions underlying intervention cost and benefits valuations to illustrate their effect on BCA outcomes. Assumptions addressed: Cost per participant, intervention effect size, discount rate.

Results: CTC was cost-beneficial even when assumptions varied. However, different assumptions produced benefit-cost results with wide variation, from a low of $1,667 per youth to a high of $7,617 per youth. Benefit cost ratios varied from $3.58 per dollar invested to $14.70. 

Conclusion: Results point to the need for principles and standards in economic analysis of prevention programs, particularly when conclusions are used to inform policy decisions.