By several measures, crime is down in America’s Washington state. Relative to national rates, juvenile crime, adult reoffending, and total crime are down. Something is going right – but what? Can this success be traced to something as apparently mundane as, well, great data analysis?

In fact, the Washington State Institute for Public Policy (WSIPP) may have contributed to this remarkable triumph. And in extending their cost-benefit approach to other policy areas, WSIPP’s reports have become the first to provide U.S. state policymakers with cost-benefit analysis of such a wide range of programs and policy options on which to base investment decisions.

Now, WSIPP’s latest report provides a ranking of the cost and benefits of programs to improve outcomes in criminal justice, education, child welfare, mental health, and substance abuse, offering guidance to state legislators in Washington, and inspiration to researchers and policy makers in other U.S. states and internationally.

Created by the Washington state legislature in 1983 and funded by the MacArthur Foundation and the state to complete this report, WSIPP is responsible for informing the legislature about the relative cost-benefit of programs and policies to help them invest taxpayer money wisely.

The cost-benefit model was created by WSIPP in the mid-1990s to evaluate programs in youth justice and criminal justice. Although the model continues to be used in these areas, it has been extended to areas such as child maltreatment, education, mental health, public assistance, public health, earnings, and substance abuse. The part of the model covering crime is the most developed and can be used for very sophisticated analyses, such as predicting the impact of a portfolio of programs and policies on crime rates and the state budget.

As the model has been influencing the selection of crime policies for nearly two decades, we can begin to see the impact of these efforts on crime rates. In comparison to crime rates in the United States as a whole, both adult and juvenile crime rates in Washington State have shown relatively larger declines since the model was introduced. In addition, although spending in criminal justice has been increasing over time, it appears to be leveling off in recent years, while crime continues to decrease.

The method used at WSIPP is unique in that it is based on evidence at each of four steps:

1) What works? The team analyzes high-quality studies to identify interventions that have achieved good outcomes – and those that have not.

2) What makes economic sense? Costs and benefits are calculated. How much does it cost to produce results, and how much are the outcomes worth? This produces a ranking of public policy options, similar to the style in which Consumer Reports or Which? magazines rank the pros and cons of consumer products.

3) Assessing risk. The riskiness of the conclusions is measured with a “Monte Carlo simulation,” testing how bottom lines vary when estimates and assumptions change.

4) Impacts on statewide outcomes. A “portfolio” analysis estimates how a combination of policy options will impact outcomes, costs and benefits – for example, how “a combination of prevention, juvenile justice, and adult corrections programs could influence Washington’s crime rate, the need to build prisons, and overall state and local criminal justice spending.” Portfolio analysis is currently only available in the area of criminal justice, but it will be expanded to other areas in the near future.

The model also now incorporates ways to translate immediate outcomes to related outputs that have monetary implications. For example, a parenting program may have a direct impact on child behavior, which could in turn affect future offending rates as well as educational achievement, which could itself have an impact on future earnings. Offending, educational needs, and earnings all have monetary implications for both the child as well as the taxpayer. Including these additional areas of future benefit increases the ways that a program can be predicted to yield a return on investment over time.

In the new report, the total benefits for each program are calculated. In each topic area, the programs are ranked according to their net benefits (benefits minus costs). Importantly, the report is not limited to programs that yield a net benefit. Indeed, many programs in the report yield a net loss. The riskiness of each investment option is also presented.

Although this report was created for use in Washington State, it can be a useful guide for decision makers across the US and internationally.

The Social Research Unit, which supports Prevention Action, is currently working with WSIPP on a translation of WSIPP’s cost-benefit model so that it can be used to estimate the cost-benefit of programs in the UK. This will be done one policy area at a time, starting with youth justice. Updates on this work will be covered in Prevention Action.

Reference:
Aos, S., Lee, S., Drake, E., Pennucci, A., Klima, T., Miller, M., Anderson, L., Mayfield, J., & Burley, M. (2011). Return on investment: Evidence-based options to improve statewide outcomes (Document No. 11-07-1201). Olympia: Washington State Institute for Public Policy.

Link to report:
http://www.wsipp.wa.gov/pub.asp?docid=11-07-1201