U4 Issue, Dec. 2014, No. 10 - Cost-effectiveness and cost-benefit analysis of governance and anti-corruption activities

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Cost-effectiveness and cost-benefit analysis of governance and anti-corruption activities

Author: Jesper Johnsøn, Senior Advisor, U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute
U4 Issue, December 2014, No. 10

Abstract:
Cost-effectiveness and cost-benefit analysis methods are currently underutilised in evaluations of governance and anti-corruption reforms in developing countries. This limits opportunities to inform policy and may lead to suboptimal reform choices and programme designs. In general, complicated interventions such as national anti-corruption strategies or anti-corruption agencies do not lend themselves easily to cost-analysis approaches, often due to the challenge of measuring the impact in terms of reduced corruption. However, cost-effectiveness analysis – and in some cases cost-benefit analysis – of sector programmes with inbuilt anti-corruption measures is a useful tool for guiding decision makers as they choose between alternative integrity measures and assess the return on investment. Cost-benefit analysis hinges on an ability to translate outcomes into a monetary value, something most feasible with public finance–related interventions. Where outcomes cannot be monetised, there are still opportunities for cost-effectiveness analysis. Two impact evaluation designs are presented that make use of cost-effectiveness analysis to overcome corruption measurement challenges. Using such designs, the value of anti-corruption activities can be evaluated even without measuring corruption.

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