Panel Paper: A Cost-Benefit Analysis of a College Career Pathways Program: Considering Estimation Issues

Saturday, November 10, 2018
Wilson C - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Daniel Kuehn1, Theresa Anderson1, Robert Lerman1, Lauren Eyster1, Burt S. Barnow2 and Amanda Briggs1, (1)Urban Institute, (2)George Washington University

This paper presents findings from the Urban Institute’s cost-benefit analysis (CBA) of the Accelerating Opportunity (AO) program in Illinois, Kansas, Kentucky, and Louisiana. Based on Washington State’s Integrated Basic Education and Skills Training (I-BEST) model, AO was an initiative to help adults with low basic skills earn industry-recognized credentials in high-growth occupations and succeed in the labor market. This CBA compared the value of the benefits associated with AO—principally earnings—with the costs of the program. The benefits of AO were estimated using standard quasi-experimental methods employed in an earlier AO impact analysis. The costs of the program were collected in a cost survey sent out in each of three program years to AO colleges and from grant reporting and follow-up discussions with state offices. The CBA results are reported as net student benefits and net social benefits.

The results show that per-student net student benefits were positive for three of the four AO states. However, only one state achieved positive net social benefits from AO.

The direction of the results is not highly sensitive to specification decisions because benefits were low, but these decisions do change the point estimates substantially. The issues we faced include: collecting accurate data on costs – especially the valuation of time spent by program personnel who would have otherwise held the same positions with the same general duties, projecting the trajectory of benefits using a decay rate, the treatment of participant cohorts, the selection of a discount rate to value future benefits in present dollars, and valuing intangible benefits that do not manifest in labor market outcomes in the observed period.

This presentation will share the methods and findings from this CBA with an eye to these five technical issues. It will demonstrate how different approaches affect the results and share the rationale for the decisions made in this case.