Cost Analysis and Learning Technologies
What are the pros and cons of using cost analyses?
Proponents say cost analysis can contribute to better policy-making in education. For a given technology intervention, cost analysis informs the policymaker of:
1) the total cost required, 2) the economic feasibility of the intervention, 3) the short run and long run cost implications, 4) the distribution of the cost burden, and 5) the potential benefits of the intervention (Tang, 1988). Simply, if properly used, cost analysis allows decision makers to select those activities that give the best results for a certain level of expenditure.
Cost analysis is passionately discussed in the literature and in practice. However, it is not normally a part of the decisions made by educational policymakers. Several impediments have been noted. For instance, most school districts do not have the resources to devote to the collection of complete cost data or to control measurements of educational effect (Power on!, 1988).
Why aren't cost analyses used more often in education?
Many educators do not believe cost makes any difference in the decision to utilize learning technologies. They talk cost-effectiveness, but they evaluate learning technologies in terms of subjective values. In fact, after a decade of enthusiasm, there still is no single compelling vision driving the infusion of technology into the schools -instead, five have been identified.
TECHNOLOGY RATIONALES
- The Social Rationale. Policymakers want to be sure that all children are "aware and unafraid of how computers work." They should be prepared to understand computers and be aware of their role in society, because computers are pervasive in many industrialized countries.
- The Vocational Rationale. There will be employment opportunities for individuals who have the proper computer skills. Therefore, computer competency is important to develop.
- The Pedagogic Rationale. Students can learn from computers. There are advantages over other traditional methods in using computers to learn.
- The Catalytic Rationale. Computers are catalysts to change schools for the better. Not only are they symbols of progress, but they can facilitate change and encourage learning (Hawkridge, 1990).
- The Efficiency Rationale. Students can learn more with technology than with traditional instructional models, and in a shorter time and at a cheaper price.
These beliefs are at the foundation of general school technology policies, which are often unrelated to specific effectiveness goals, or the cost of providing technological tools. Simply, decisions are motivated by a more general belief that technology will somehow affect the quality of student learning.
Secondly, many educators operate from an effectiveness-based philosophy rather than a cost-based philosophy. Effectiveness-based educators argue that ultimately the effect of a program is more important than its costs. They believe that if there is no effect, then the program is of no value, regardless of cost. These educators tend to think of cost-effectiveness as a generic criterion associated with "good" programs, rather than as a specific technique of evaluation that provides particular information on costs and effects (Randall & Spuck, 1986).
What does the research say?
Sparce research supports the notion that the cost-effectiveness of technology has not been a strong factor in many decisions. Although publications on the topic are plentiful, many either focus on the importance of conducting an analysis, or provide guidelines for doing so, rather than actually providing data.
The emphasis in the literature has been on costs or effectiveness. For example, Pisapia and Perlman (1992) in a meta-analysis of 184 studies concluded that learning technologies are effective, but that performance varies. Few studies have used both sides of the equation.
It can be safely concluded that cost analysis has been proposed and advocated, but there is little evidence that many rigorous studies have been conducted or utilized. However, a few notable studies have examined the cost-effectiveness of technology in the schools. Therefore, readers are urged to view these results cautiously unless the conditions of a study are similar to their use of technology. The general results are as follows:
- Placing microcomputers in classrooms rather than labs reduces costs and makes them available for other projects.
- Pairing students may reduce student costs without reducing achievement.
- When student utilization is increased, cost-effectiveness increases.
- If computers are spread out over more subject areas, and more of school day, cost-effectiveness increases.
- Cost per pupil is sensitive to enrollment, given high fixed costs of technology based programs. Fixed costs often exceed 50% of the total costs of technology based programs.
- Distance education appears to be cost-effective.
- CAI in elementary math and reading compares favorably with alternative compensatory techniques.
- Computer assisted training costs are approximately one-third lower than conventional instruction.
What cost analysis techniques can be useful in education?
The fact that computer-related activity is frequently "belief driven" rather than goal driven, argues for a battery of cost analyses which evaluate outcomes in terms of their costs, subjective value to the decision maker, resources available for acquisition, and/or their effectiveness being incorporated into the decision making process.
The goals stated above can be addressed through the following techniques: 1) cost analysis, which determines the costs associated with a program; 2) cost-effectiveness analysis, which assesses the costs associated with the various effects of the intervention, 3) cost utility analyses, which evaluates outcomes in terms of their subjective value to decision makers; and 4) cost feasibility analysis, which assesses the cost of a program in relationship to the amount of funds available.
Under what conditions can these analyses be used?
These cost analyses techniques can be used to 1) plan a program addition or improvement, 2) conduct a cost analysis for an alternative under decision consideration, 3) compare the cost-effectiveness of two or more alternatives under consideration for funding, 4) produce a project statement with associated budget lines and expected outcomes to enhance program development, effectiveness and efficiency, 5) control costs to improve efficiency, 6) adjust program components to enhance cost-effectiveness, and 7) increase the efficiency and effectiveness of a project's total design.
For example, cost analyses can be used to design a computer laboratory with a budget, produce a proposal for a new instructional program, justify ordering a systems two lab as opposed to a synergistic lab (or vice-versa), or compare the costs and/or the effectiveness of two or more strategies for resolving the same issue, such as manual paper processing as opposed to image scanning.
How can educators use these tools?
A useful approach in educational contexts may be to use cost analysis and cost feasibility analysis to frame purchase decisions. Then, cost-effectiveness analysis to evaluate those decisions before expanding the use of the technology. And, cost utility analysis to make decisions that will have support among decision makers.
Cost analyses utilized in these ways involves more than the determination of relative effectiveness and costs. It also involves assessing the values of policymakers. In such cases, the most appropriate technique to employ is cost-utility analysis. Measurement of utility assigns a numerical value to the desirability each possible outcome has for each decision maker. When utility results are combined with cost-effectiveness analysis, the resulting decision more closely reflects the desires of the decision maker.
John Pisapia
Answers to questions found in this research brief have been synthesized from the following MERC publications. Copies can be purchased using the online order form on the publications page.
Pisapia, J., Schlesinger, J. & Perlman, S. (1993). Cost analysis program (CAP), software and user manual.
Pisapia, J. (1994). Cost analysis and learning technologies.