A New Tool to Support Cost Analysis in Education Research

Mark Schneider, Director of IES | April 14, 2020

IES is committed to having its funded researchers conduct appropriate economic analysis as part of their studies. This has been a heavy lift for many of our applicants and grantees, since economic analysis requires a skill set that is different from what has been "traditionally" used or taught in graduate training programs in the education sciences.

We emphasize cost analysis because that information can help determine the level of resources needed to implement a specific program and can help schools or districts decide whether an intervention is financially feasible. Cost information can also inform issues of implementation and accountability, including understanding whether resources are being used as planned. Moreover, cost analysis is often a building block for more advanced forms of economic evaluation, including cost-effectiveness analysis and cost-benefit analysis.

For the last few years, IES has pushed to make economic analysis more commonly used by requiring it as part of many of our funded research projects. We have also been committed to providing more training materials to help the field meet our cost analysis requirements. I'm happy to announce the launch of a new resource to help IES grantees and education researchers in general conduct cost analyses.

The Cost Analysis Starter Kit, available online on the IES website, provides a three-phased approach to the basics of cost analysis. Our goal is to present information in a way that is accessible and user friendly for those who are new to the topic, are less experienced with it, or simply want a refresher.

The starter kit is organized into three phases:

Phase 1 focuses on identifying the ingredients, that is, what resources—whether personnel, facilities, equipment, supplies, or other inputs—are used by a program and then describing their characteristics and quantity.
Phase 2 is about pricing the ingredients, which involves valuing each of the resources the program uses by estimating or determining their prices over a particular period of time.
Phase 3 involves creating and using the cost estimate, including calculating the cost of the program, testing assumptions (sensitivity analysis), and then using the findings for any further economic evaluation that's needed.

Hopefully, the starter kit will help counter two common myths about cost analysis. The first is that cost analysis is complex and time consuming. In reality, a basic cost analysis does not need to be overly difficult. Researchers should focus on identifying and pricing the most costly aspects of a program. Less costly inputs can often be roughly approximated without any meaningful effect on accuracy. (Sorry, but the part of the myth that cost analysis is tedious has more than a bit of truth to it—but that is part of doing this essential work.)

The second myth addressed in the starter kit is that cost analysis is a separate, distinct process from program evaluation. In practice, one of the main steps in cost analysis—identifying the resources required to implement a program—is a main component of implementation research within a program evaluation. That makes this step in cost analysis something researchers will likely be doing anyway as part of their research, rather than an add-on that takes additional time and energy on the back end.

The starter kit is designed to be useful, usable, and used! It is also just the first step in fulfilling IES' commitment to developing capacity in the field to do economic analysis. Indeed, expect to see announcements of additional resources in the near future.

We intend for the starter kit to be a living resource, with periodic updates based on user feedback. So please send feedback and suggestions to ncee.feedback@ed.gov.

I hope you are healthy and finding some sources of joy during these difficult circumstances. As for me, I violated some of the lockdown rules and spent the holiday weekend with my daughter and her family (including her 6- and 9-year-old daughters). We went from my locked down apartment in DC to her car to her locked down house in Raleigh, observing social distance the whole time—except of course with family members.

Wow. I knew from telephone conversations with both my daughters and friends with children that having young kids at home 24/7 was hard—but living it is something else! Yay schools and yay teachers for so many things, including helping keep my daughters sane.

Quick questions: living in DC—and not even owning a car—I had not seen first hand the effects of social distancing on car etiquette. Is it necessary to wear a mask while driving in your own car? And is stopping a car 6 feet away from a pedestrian at a crosswalk part of social distancing? As a frequent pedestrian I would love to see that crosswalk etiquette continue but doubt it will.

As always, feel free to reach me at mark.schneider@ed.gov.