Economic Analysis
Economic analysis of adolescent health programs can provide important information on their value relative to other interventions.
Economic Benefits of Interventions
The macro approach to measuring the economic benefits of interventions is to define the benefits of investing in youth in terms of the investments' effect on economic growth, which typically is measured in terms of growth in gross national product per capita. Some research suggests that investments in young people—whether in access to reproductive health care, in education, or in other key facets of their lives—have synergistic effects that promote overall economic development (Birdsall, Kelley, and Sinding 2001). For example, shifts to smaller family size and slower rates of population growth in East Asia appear to have played a key role in the creation of an educated workforce, the accumulation of household and government savings, the rise in wages, and the spectacular growth of investment in manufacturing technology. The shift to smaller families that is taking place in many countries will open another window of opportunity as workers have proportionately fewer old and young dependents to support.
If societies invest in health, education, and job creation, the resulting economic gains will improve their overall quality of life. Education, particularly for girls, is strongly related to reproductive behavior. In most countries, girls who are educated are more likely to delay marriage and childbearing, whereas girls with less education are more likely to become mothers as adolescents. Unfortunately, the causal relationships involved are not clear. Are girls more likely to get married when they leave school, or do some girls prefer to terminate their schooling and marry early? The difference is critical. In the first case, the appropriate policy response would focus on improving schooling opportunities for girls. In the second case, research would need to be done first to determine the underlying reasons for girls'—and their parents'—preferences for early marriage instead of additional schooling. The next step would be to assess whether these reasons appear to reflect the girls' (and society's) best interests and, if not, to find interventions to address the root causes of this preference.
The micro approach to measuring the economic benefits of interventions is to build on microeconomic estimates of direct productivity effects that can be measured in monetary terms. For other effects that cannot readily be translated into monetary terms, analysts can use the cost of the most cost-effective alternative to achieve the same effects. Knowles and Behrman (2003a) use this approach to estimate the benefits of various youth-focused investments, including in health. They summarize the three types of effects: (a) those that can be directly valued in monetary terms, (b) those that may require indirect valuation, and (c) those that are particularly difficulty to monetize. Table 59.5 presents examples of these effects.
[Table .]
Cost-Benefit Analysis
Cost-benefit analysis is well suited to the economic analysis of projects aimed at youth, in part because many investments in young people yield multiple benefits, such as additional schooling and improved health. Finding any effectiveness measure that adequately reflects the wide range of benefits obtained from some types of investments in youth is difficult, but cost-benefit analysis has the advantage of allowing comparisons across a range of interventions that may vary considerably in terms of type and effects.
One of the few cost-benefit analyses specific to adolescent health is Knowles and Behrman's (2003a) study that examines three interventions: a program to provide iron supplementation for secondary schoolchildren, a school-based program of health education to prevent HIV/AIDS, and a tobacco tax. The study estimates benefits and costs over a youth's life cycle, discounted back to the age of 18. The study uses direct estimates of benefits that could be readily estimated in monetary terms (such as gains in labor productivity) and indirect estimates of other benefits, such as reduced fertility and improved health, that could not be easily monetized. The latter were estimated as the least cost of investments currently made to obtain the same benefit; for example, the cost per birth averted in a family planning program was used to value reduced fertility. Table 59.6 summarizes the findings of these cost-benefit studies, together with estimates of the benefit-cost ratios for selected other youth-targeted interventions.
[Table .]
The examples of cost-benefit studies cited here and other calculations of benefit-cost ratios show that health interventions aimed at adolescents can be good public investments; however, the results must be interpreted with some caution. For example, the relatively low benefit-cost ratio of an HIV prevention program in Honduras was for a program in a country where HIV incidence among young people is relatively low (0.1 percent). Where the incidence is much higher, as in many of the hardest hit countries in Africa (1 percent or more), this ratio would be proportionately higher. In addition, in the Honduran study, the benefits included were limited to the prevention of HIV/AIDS and did not include other possible benefits, such as increased education, reduced STIs other than HIV, and reduced teen pregnancies and abortions. The Honduran study also assumed that the effects of the intervention would not continue beyond one year; however, if they were to continue at the same level to age 29 (assuming that any decrease in the effect of the intervention over time would be offset by increases in the incidence of HIV infection with age), the benefit-cost ratio would increase from 0.5 to 4.6. More than anything else, Knowles and Behrman's estimates demonstrate the sensitivity of the benefit-cost ratios of investments in youth to wide variations in key assumptions, which may be equally plausible because of the limited information available on the costs and effects of many investments in youth.
Beyond the question of how sensitive such estimates are to the underlying assumptions and the context, the basic question is what guidance they provide for public policy. High benefit-cost ratios certainly point to areas that merit further consideration for possible policy interventions, but they do not indicate whether using public resources for interventions has an efficiency rationale, because they generally do not identify differences between private and social benefit-cost ratios. If the purely private benefit-cost ratios for an investment are high, then presumably incentives to use private resources for this investment are high, but an efficiency rationale for using public resources does not exist unless the social benefit-cost ratio exceeds the private one because of factors such as spillovers or market imperfections. High benefit-cost ratios that do not distinguish between social and private returns, therefore, call for further investigation. Interventions may warrant the use of public resources on efficiency grounds, but they also must answer that important question of whether the benefits are social or private.
