6. Cost-eﬀectiveness OVERVIEW ‘Cost-eﬀectiveness’ is about the relationship between costs and eﬀects. It is a measure of how cheaply speciﬁed objectives can be reached, or how far they can be reached at given cost. In principle, it provides a criterion for judging and choosing between alternative means of producing desired eﬀects according to the value for money they oﬀer. The quest for cost-eﬀectiveness has become something of a preoccupation amongst donors and governments funding social transfer programmes, and much of the rather polarized debate about the relative merits of diﬀerent instruments, cash and food transfers especially, has been in cost-eﬀectiveness terms. Choices about whether and how to target social transfers are judged on their relative cost-eﬀectiveness, as are diﬀerent methods of delivery. Sponsors of social protection programmes, and the communities to whom they are accountable, have an obvious and legitimate interest in ensuring that programme outcomes justify money spent, and in whether these outcomes could be enhanced within budgetary constraints or achieved more cheaply in other ways. However, straightforward as it may seem at ﬁrst sight when applied to social transfers, cost-eﬀectiveness is open to diﬀerent conceptual and empirical interpretations, and results of costeﬀectiveness calculations can therefore be manipulated to serve particular policy advocacy interests. Perhaps the most important lesson of this chapter is that, before drawing any conclusions from ﬁndings about the cost-eﬀectiveness of a social transfer scheme, it is necessary to scrutinize carefully...
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