Module 1
Introduction to Cost Analysis and Other Economic Evaluations
In this module, you will learn what an economic cost analysis is, how economic costs are different from prices or expenditures, and how cost analysis and other types of economic evaluation can be helpful. We describe the different types of economic evaluation and which one might be the most appropriate to answer your research question. Finally, we’ll run you through an overview of the 4 major stages in conducting a cost analysis. Each of the four modules after this one focuses on one of these four stages.
In This Module…
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What is meant by an economic cost analysis?
How can cost analyses and other economic evaluations be helpful?
Which type of analysis can answer what questions?
What are the stages of conducting a cost analysis?
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Before you begin this module, take the pre-quiz to test whether you know what type of economic evaluation to use when.
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Tips for scheduling and organizing your online learning
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Module 1: Video 1
Introduction to Module 1Module 1: Video 2a
Introduction to Cost AnalysisModule 1: Video 2b
Decision Flowchart for Economic EvaluationsModule 1: Video 3
What Kind of Economic Evaluation Should I Do?Module 1: Video 4
The Stages of a Cost Analysis -
The Value of Cost Analysis. Schneider, M. (2020, August).
Capturing cost data: a first-mile problem. Holla, A. (2019)
Overcoming challenges in conducting cost analysis as part of an efficacy trial. Hollands, F., Brodziak, I., Pratt-Williams, J., Shand, R.D., Drummond, K., & Artzi, L. (2021, July 15).
Cost analysis standards & guidelines 1.1. Hollands, F. M., Pratt-Williams, J., & Shand, R. (2021).
(Links to the readings are available in the Recommend Readings section below.)
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A synopsis of some of the most common questions we receive about cost analysis and our answers.
An introduction to cost analysis.
The Critical Importance of Costs for Education Decisions
A brief explaining the different types of economic evaluation and how the information they provide can inform education decisions-makers.
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At the end of the module, we present several scenarios which you can read to see whether you can determine what kind of economic evaluation(s) might be applicable in each case.
The development and production of these materials was supported by the Institute of Education Sciences, U.S. Department of Education, through Grant R305U200002 to Teachers College, Columbia University. The opinions expressed are those of the authors and do not represent views of the Institute or the U.S. Department of Education.
Pause for Thought:
What are your learning goals for this module? Take a few minutes to write them down. Keep these goals in mind as you work through the lessons in this module.
Module 1: Video 1
Introduction to Module 1
03:51 minutes
In this video, Introduction to Module 1, we explain the difference between prices, expenditures, and costs. We briefly introduce different types of economic evaluation and end with a set of teaser questions for you to assess whether you already know which type would be useful to answer different questions.
Key Terms You Should Know from Video 1:
prices, expenditures, economic costs, opportunity costs
Test What You Know
Here are the questions we asked at the end of the video: Introduction to Module 1 to see whether you already know what type of economic evaluation could help answer specific questions. Answers available too!
Pause for Thought:
How did you do on the Pre-Quiz? If you scored 5 points, great! If you scored less than 5 points, that's fantastic! That means this module is right for you. Carefully go through the module materials and try taking this test again. Even if you scored the full 5 points, we encourage you to go through all the module materials and complete the End-of-Module activity to identify any knowledge gaps.
Making the Most of Your Learning
Make Time
for Study
Set aside time daily or weekly in which you can focus on your learning, then be consistent and “show up” for your study appointments on time. If you struggle with procrastination and discipline, let someone else know what you’re doing to help hold you accountable for making progress.
Organize Your Learning
Go through the lessons in order. Read the lesson outline for a preview of each lesson’s topics. Follow along with the slides. Use the note catcher to help you remember key concepts and write down any terms that aren’t clear to you.
Test
Yourself
After going through each lesson, test yourself by seeing if you can explain the key terms listed for each lesson in your own words and to someone else. If you are able to teach someone else the information, it will be a good indicator that you understand it.
Stay
Curious
Go further with your learning by going through the Recommended Readings to deepen your knowledge of the module’s topics, then complete the End of Module Self-Assessment to apply the concepts and reinforce your learning.
Pause for Thought:
What is your plan for learning success? What days and times will you set aside for your study? How will you hold yourself accountable for your learning? How will you reward yourself when you accomplish your learning goals?
Module 1: Video 2a
Introduction to Cost Analysis
09:21 minutes
This video provides an overview of cost analysis, why it is useful, what it involves, and the different types of economic evaluation. It includes an example about digital math tools to demonstrate the difference between expenditures and economic costs.
Key Terms You Should Know from Video 2:
ingredients method, cost analysis, expenditure analysis, cost-feasibility analysis, cost-effectiveness analysis, cost-benefit analysis, cost-utility analysis
Module 1: Video 2b
Introduction to Cost Analysis:
Decision Flowchart for Economic Evaluations Investments and Returns
04:21 minutes
This video runs through a series of questions to help you determine what type of economic evaluation makes sense for answering your research questions. The first set of questions focuses on what you are investing. The second set focuses on possible returns to those investments.
Module 1: Video 3
What Kind of Economic Evaluation Should I Do?
07:17 minutes
This video provides an example of an educational decision that each type of economic evaluation could help inform.
Key Terms You Should Know from Video 3:
expenditure analysis; total costs; incremental costs; cost-feasibility analysis; cost-efficiency analysis; cost-effectiveness analysis; cost-benefit analysis; cost-utility analysis
Module 1: Video 4
The Stages of a Cost Analysis
05:55 minutes
This video walks you through the four main stages of conducting a cost analysis: design, data collection, data analysis, and reporting. Resources mentioned in this video are all available at https://capproject.org/resources.
Key Terms You Should Know from Video 4:
prospective cost analysis, sensitivity analysis, cost metrics
Recommended Readings
In the list are two blogs that explain the value of cost analysis and one about challenges in conducting them. The last item is CAP Project’s standards and guidelines for conducting cost analysis. To date, this has been our most popular resource.
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In this blog post, Mark Schneider, Director of the Institute of Education Sciences, explains why cost analysis is important in education research and what IES is doing to support researchers in executing cost analysis.
Schneider, M. (2020, August). The Value of Cost Analysis. Institute of Education Sciences.
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Alaka Holla at the World Bank describes the challenge of conducting cost effectiveness analysis as a “first-mile” problem. “We don’t how how to get started,” Holla explains. This blog post provides a starting point for addressing a few challenges that can come up when planning for cost data collection.
Holla, A. (2019). Capturing cost data: a first-mile problem. World Bank.
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In this article, the CAP Project team, discusses four key challenges of conducting cost analysis and cost-effectiveness analysis as part of a large efficacy trial: 1) Not understanding the value of a cost analysis for educational programs; 2) Inconsistent implementation across cohorts; 3) Balancing accuracy of data against burden on participants and researchers; and 4) Determining whether to use national and/or local prices. The team provides suggestions on how to address these challenges.
Hollands, F., Brodziak, I., Pratt-Williams, J., Shand, R.D., Drummond, K., & Artzi, L. (2021, July 15). Overcoming challenges in conducting cost analysis as part of an efficacy trial. Inside IES Research.
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This reading presents the CAP Project’s distillation of how to execute a cost analysis. These guidelines provide recommendations for a standardized approach to cost analysis of educational programs and are designed to assist researchers in complying with the Institute of Education Sciences’ (IES) Standards for Excellence in Education Research (SEER) requirement.
The guidelines are based on the emerging literature base on cost analysis in education and on the CAP Project team’s collective experience conducting cost analyses, reporting the results to practitioners and researchers, and reviewing IES grant applications.
Hollands, F. M., Pratt-Williams, J., & Shand, R. (2021). Cost analysis standards & guidelines 1.1. Cost Analysis in Practice (CAP) Project. https://capproject.org/resources
Apply Your Learning
At this point you should be able to determine which type of economic evaluation would be helpful under different scenarios. Take the End of Module Self-Assessment to test your ability to apply your learning.
Additional Resources
Here are a few more items that may be helpful introductory materials to review.
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A list of commonly asked questions about cost analysis and our answers
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Cost Analysis: A Toolkit. Institute of Education Sciences. U.S. Department of Education. Washington, DC. (2020). An introduction to cost analysis.
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REL Brief providing background on cost analysis methods and applications to education decision-making (7 pgs).
Your Feedback
How helpful was it? Do you feel more confident about your ability to conduct a cost analysis? What can we improve? Please complete the Module 1 Feedback Questionnaire.
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Module 2: Designing a Cost Analysis
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