Sudhir Anand and co-authors recently published a fascinating book, The Costs of Inaction, which looks at cost-benefit analysis in a different way. All cost-benefit analysis requires the analyst to specify a counterfactual--how the world would have evolved in the absence of the project of program. This is critical. An evaluation in Kenya included increased use of cellphones as an indicator of project success -- neglecting the fact that cellphone use in neighboring villages was just as widespread.
In many cases, the counterfactual could be "doing nothing." For a number of important areas such as health and education in Africa, The Costs of Inaction calculates the costs of doing nothing in terms of lives lost or under-educated children.
They then compare these to the net benefits (benefits minus costs) of various programs, such as school feeding in Rwanda or free male circumcision in Angola. The difference between the net benefits of the program and the costs of doing nothing is what they call "the costs of inaction."
In the book, the programs that are being evaluated are typically government programs. Yet, we know that the delivery of health and education services in Africa suffers from multiple government failures. Teachers in Tanzania are absent 23 percent of the time. When present, they are in class teaching a quarter of the time. In Chad, the share of nonwage health spending that reaches the clinic is one percent. And doctors in Senegal spend a total of 39 minutes a day seeing patients.
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