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Spite of These and Other Limitations. .Benef It-Cost Analysis , .Interjects4 Systematic Analysis Inte; Previously Judgmental .Area

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Spite of These and Other Limitations. .Benef It-Cost Analysis , .Interjects4 Systematic Analysis Inte; Previously Judgmental .Area DOCUMENT RESUME ED 066 554 VT 0 14.707. AUTHOR Stromsdorfer, Ernst W. TITLE Review and Synthesis of Cost-Effectiveness Studies of Vocational and Technical Education. INSTITUFION Ohio State Univ., Columbus. Center for Vocational and Technical Education. SPONS AGENCY Office of Education (DHEW), Washington,. D.C. REPORT NO Inf-Ser-57 PUB DATE 72-- NOTE . 151p. AVAILABLE FRCHSupewintendent of Documents, U.S. ,Government Printing Office, Washington, D.C. 20402 . EMS PRICE 17-30.65 BC-06.58. DESCRIPTORS. Bias;- community :Benefits; *Coat Effectiveness; Eaployment Programs; Manpower "Developnent ; *Methodology; Program Coati; Program Effectiveness; *Program Evaluation; *ResearCh'Reviews (Publieations); Sampling;: Statistical Technical Education; *Vocational Education'. , IDENTIFIERS Minpolaer Development Training, Act; MDTA ABSTRACT The methodologY, to parting! benefit-Cost -studies .exists, but''there is much ambiguity concerning the .implications of such studies as a' result of using 'faulty methodology. ,For example, ,control groups are a necessity, ae are adequate ,sampling prOcedtires and adjustment for non-response\ bias' and self -selection-bias, and .all stliclies do.aot employ this methodology. Another limitation is that currently a benefit-coe ti. study. will 'only show whether .or !not a program appears to. pay. Further judgments must be made on whether to expand or cut back the:Program, -and What .to give up or .take :In. Spite of these and other limitations. .benef it-cost analysis , .interjects4 systematic analysis inte; previOusly judgmental .area... The cost and methodological limitatiOns of'such.studies will .inhibit their immediate widespread adoption. .This study,. written for non-economists, surveys the various approaches to imprOving the v ,analysis of vocational education ahd related _manpower training programs... (CD) 11; UM. DEPARTMENT OF HEALTH. ECUCRTM1116 WELFARE OFFICE OF EDUCATION THIS DOCUMENT HAS BEEN REPRO- DUCED EXACTLY AS RECEIVED FROM THE PERSON OR ORGANIZATION DRIG. INATTNG IT, POINTS OF VIEW OR OPIN- Information Series No.57 IONS STATED DO NOT NECESSARILY . REPRESENT'. OFFICIAL OFFICE OF EDU- VT 014 707 CATION. POSITION OR POLICY, REVIEW AND SYNTHESIS OF COST-EFFECTIVENESS STUDIES OF VOCATIONAL AND TECHNICAL EDUCATION Ernst W. Stromsdorfer Associate Professor of Economics Indiana University Moomington, Indiana ERIC ClearinOonse on VOcatianal and Teehniad Edam* The Celt*. for Vocational and Technicel Education . The Oldoltate Unbrersity 1900 Kenny Road . Colombo, Ohio 43210 Most, 1972 The material in this publication *as prepared purivant to a contract with the Office of Education, U.S. Department of Health, Edwatiord and Welfare. Con- tractors undertaking such projects under government sponsonhip are encouraged ro express freely their judgment in professional and technical matters. Points of view or opinions do not, therefcre, necessaHly represent' official Office of Educe- tion position or policy. For ale by dui Superintendent ol Documents, Ui. .Ooaisnt Printing ohm Weddings, D.C. MN . PREFACE . The economics of vocational-technical education programs versus the effects of a lack of such programs is considered extensively in this work. Cost-Effectiveness Studies of Vocational and Technical Educationis designed to alert researchers anddirectors of education-related programs alike to the issues surrounding this area. The author questions the validity of academic study as 'opposed to vocational-technical study in terms of future earning power for whites and nonwhites. He furtherrelatei problems inthis area to thelength of vocational-technical education programs.. The bibliography is subdivided into four sections to allow the specialist to peruse those readings iiertinent to his field. The profession is indebted to Ernst W. Stromsdorfer, Indiana University, for, his scholarship in the preparation of this review and synthesis report. Recognition is also due Michael E. BOrus, Michigan State University, J. Robert Warmbrod, The" Ohio State University, and Robert C7,-Young, The Center, for their critical review 'of the manuscript prior to final revision and publication. J. DavidMcCracken, information specialist at The Center, coordinated the public ation's development. Robert E. Taylor ,Direc tor The Center for Vocationa! and Technital Educttion ERIC Clearinghouse on Vocational. and Technical Education INTRODUCTION This study seeks a synthesis of the var!ous approaches to improving the analylis of vocational education and related manpower training prograins. This will be an economic analysis since the programs in question are designed to improve the efficiency of the United States labor force and increase the overall lel of welfaie or well-being in the most general sense of this term. However, this study will also discuss the implications of noneconomic benefits to these programs*. as they relate to cost-benefit analysis. This study will achieve this synthesis by investigatinibie current state of the art of economic evaluation of these educational prisgfinuN:, . Both cost-benefit and cost-effectiveness studies of vocational education and related manpower programs will be summarized to deterinine the current "state of the art" and to draw policy conelusions concerning the optimal letiel of investment in such programs. LikeWise, the methodological literature will ,be summarized, to serve as a, reference point for judging the extant cost-benefit studies as well as to serve as a general guide to the conduct of such flutire analyses: While this study, is intended' for noneconomists, economic analysis and theory will be used; However, much of the methodology of dbst-benefit analysis is relevant to any rigorous social sciena to that, with appropriate development of ideas and economic concepts, the materials covered should be of use to the interested noneconomist. : As in any survey of the literature, this study draws very heavily on the Works of others, ind the present author has only a marginal claim to originality. In this regard, therefore, j would like to express my appreciation to those numerous people on whose Works I have relied. Specifically, I would like to thank the editors of Socio-Economic Planning Sciences for permission to use sectiont of My jointly authored article, "SPecial Problems in the Economic Analysis of Human Resources," in Chapter I. Thanks are due to Einar Hardin and_ Michael E. Borns for permission to repreduce data froni their stildy; Economic Benefits and Costs of Retraining (Lexington, Mass.: Lexington Books,: D.C. Heath and Co., 1971). lAure M. Sharp likewise gave permission to dupliCate data from her study, Graduates of Vocational-Technical Progranis in Junior Colleges. Also, rwould like to Thank Gerald G. Somers for his permission tO use part of my jointly authored article in his book, Vocational Education: Today and Tomorrow, Thanks are especially due to my former colleagues, Jerome Moss of the University of Minnesota, Teh-wei Hu of the Pennsylvania State University and : Maw Lin Lee of the University of Missouri, who graCjously consented to allow %, me to reprint or adapt from portions of our previously published articles. Finally, parts of Chapter III are based on analysis previously shown in Report of the Analysis Group, HEW Vocational Educoon Review Task Force. I would like to reaffirm that I alone am responsible for any remaining errors in this study, including any possible misinterpretations of authors' works or ideas. .Ernsi W. Stromsdorfir TABLE OF CONTENTS Page THE RATIONALE OF ECONOMIC ANALYSIS OF EDUCATION AS AN INVESTMENT 3 Optimum Allocation of Public Expenditures for Vocational Educa ti on 3 Benefit-Cost Analysis and the Investment Criterion 11 Constraints Which Invalidate the Rate of Return Criterion 14 Constraints Which Invalidate the Present Value Crite rion 16 Constraints Which Invalidate the Benefit-Cost . Ratio Criterion 19 Summary 20 METHODOLOGICAL ISSUES IN THE ESTIMATION OF COSTS AND BENEFITS 21 Definition of Cost and Benefit 21 General Considerations 22 Practical Issues and Suggestions in the Measurement of Costs and Benefits .30 Summary ao A REVIEW AND SYNTHESIS OF BENEFIT-COST AND COSTEFFECTIVENESS stpmEs 45 Summary of Results: Broad Program Effects 49 Impacts of Vocational and Manpower Training on Selected.Sociodemographic Groups 69 Effects of Vocational and Manpower Training by Program Area and Skill 87 SUMMARY, IMPLICATIONS, RECOMMENDATIONS 101 Summary and Implications 101 Research in Progiess 104 The Future of Benefit-Cost Analysis in Vocational Education 105 BIBLIOGRAPHY 107 I.COncepttial Issues 107 II.Vocational Education 120 III. Manpower Programs 128 IV. General Works . 139. V. Bibliographies 141 4.7:7 LIST OF TABLES 1. Constraints on Decision Rules 16 2.Differential Shadow Price Estimates of the Value of Classroom Space, Greater Los Angeles Area 32 3.Objectives and Population to be Served for Selected Federal Manpower Programs 46 4.Student Characteristics by Race, Sex, Ar, and Program, in Percent, 1969 . 48 5. Comparative Analysis of Cost and Benefit Estimations of Select Id Studies of Secondary Vocational-Technical Education 50 6.Comparative Analysit of Cost and Benefit Estimates of Selected Studies of Post-Secondary Vocational-Technical Education and Junior College Education 54 7.j Comparative Analysis of Cost and Benefit Estimates of Selected Studies of MDTA Institutional and On-the-Job Retraining and ARA Reiraining .. 58 8.comparative Analysis of Cost and Benefit Estimates of Selected Studies of the JOBS and CEP Programs . ° 60 9:
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