Valuing Outcomes of Social Programs: The RAND Database of Shadow Prices for Benefit-Cost Analysis of Social Programs

In conducting benefit-cost analyses (BCAs) of social programs, the analyst requires estimates of the economic value, or “shadow prices,” associated with the various short- and long-term outcomes that may be affected by a particular program. Indeed, many important benefits that flow from well-designed and -implemented social programs are rarely, if ever, captured in monetary terms in the associated BCAs, or such BCAs are not performed, in part because shadow prices (i.e., the economic values) are not readily available to express the outcomes that the programs affect in monetary terms. In other cases, BCAs are performed but are not comparable with BCAs in the same or other areas of social policy because different shadow prices are used. The lack of valid shadow price measures or the inconsistent use of such measures across BCAs currently constrains the set of social programs for which benefit-cost studies are conducted and limits the comparability of those BCAs that are prepared.

This presentation will feature the Valuing Outcomes of Social Programs (VOSP) database, a new resource developed by researchers at the RAND Corporation, that serves as a centralized web-based repository of shadow prices for use by the research and policy communities. The primary objective for the database is to reduce the “transaction costs” associated with conducting BCAs of social programs by providing researchers with an objective, well-documented resource. A second goal is to support standardization in the shadow prices used by the research community. The presentation will outline the range of shadow prices covered in the database, describe the methods used to populate the database, and demonstrate the output from the tool.