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EDRS PRICE, MF01/PC14 Plus Postage O DOCUMENT RESUME ED 208 185 CE 030 246 AUT#OF Simison, Diane: And Others TITLE Design of a National Cost-Benefit Study ofVocational. Education at the Secondary, Postsecondary and Adult Levels: Final Report. INSTITUTION Rehab Group, Inc., Arlington, Va. SPONS AGENCY Department of Education, Washington, D.C. PUB DATE 12 Oct 81 CONTRACT 300-80-0747 : NOTE 350p.; For related documents see CE 030 247-249. EDRS PRICE, MF01/PC14 Plus Postage. DESCRIPTORS Adult,Education; *Cost Effectiveness; Data Analysis; Data Collection:. gducational Research; *EvaivatiOn Methods; *Feasibility Studies; Ligature Reviews; 'Models; *National Surveys; Postsecondary EduCation; Program Development; Program Effectiveness; *Research Design; Research Methodology; Research Problems; Secondary Education; State of the Art Reviews; *Vocational'Education ABSTRACT A study examined the feasibility of performinga national cost- benefit analysis-of secondary,postsecondary, and adult vocational education. The study involved threecomponents: a survey of the state cf the art of utilizing cost-benefitmethodologies to evaliate the'returnson investments'in vocational education; an overview cf the potential measurement problems inperforming a national study and strategies to overcomeor minimize thebe problems; and, a Delphi analysis soliciting input from technicalexperts (including economists,. vocational educators, mathematicians,and Department of EduCation staff) on the desirabilityand feasibility of various components ofa proposed cost-benefit model of vocational education. While data from these threesources suggest that a national cost-benefit study of vocational educationis technically feasible, there are numerous limitations in specifyingthe relationship between vocational education costs and benefits.These limitations involve analytical evaluation techniques that req.ate' costs to benefits, methods fin measuring costs and benefits,and characteristics of. vocational education. Includedin the appendixes are abstracts of relevant items from the literature search; bibliographies; and the Delphisurvey package, survey results, and panelist comients (Related reports on individual components of the _project are available separately through ERIC- -see note.)(MN) ***********4*********************************************************** * Reproductions supplied by EDRS are the best thatcan be made * * from the original document. * ********************************************************************** 0 0 DESIGN CF A NATIONAL COST-BENEFIT \\ STUDY OF VOCATIONAL EDUCATION AT THE SECONDARY, POSTSECONDARY AND ADULT LEVELS: FINAL REPORT t., BY: Dr. Diane Simison, Project Manager Dr. Mark Shugolf, Pribcipal.Investigator Mr. Tim Helms, Research Associate Ms. Dorine Seidman, Contributing Author Ms. Peggy-Acker Hartman, Contributing Author Department of Education Contract Number: 300-80-0747 U.S. DEPARTMENT OF EDUCATION NATIONAL INSTITUTE OF EDUCATION EDUCATIONAL RESOURCES INFORMATION Cb CENTER (ERIC) This 'document has been reproduced as 'R) received from the person or organization -. originating it. en October 12, 1981 n Minor changes have been niide to Improve reproduchon Quality. Points of vow or opinions stated in this docu 4.0 men( do not necessarily represent official NIE position or policy. 'Rehab Group Inc5827Columbia Pike Falls Church Virginia22041Telephone(703) 820-4350 DESIGN OF A NATIONALOST-BENEFIT STUDY OF VOCATIONAL EDUTION AT THE SECONDARY, POSTSECONDARY AND ADULT LEVELS: FINAL REPORT BY: Dr. Diane Simison, Project Manager Dr. Mark Shugoll, Principal Investigator Mr. Tim Helms, Research Associate to, Ms. Dorine Seidman, Contributing Author Ms. Peggy-Acker Hartman, Contributing Author Department of Education COntraCt Number: 300-80-0747 October 12, 1981 3 TABLE OF CONTENTS Chapter Page ACKNOWLEDGEMENTS ix 1 INTRODUCTION 1-1 Overview 1-1 Study Focus 1-1 Study.Methodology 1-2 Organization 1-3 Prior Study Reports 1-4 .2 BREADTH OF VOCATIONAL EDUCATION 2-1 Overview 2-1 Programtevels 2-1 / Program Areas 2-2 Delivery Systems 2-3 Student Populations 2-4 Conclusion 2-4 3 STATE OF THE 'ART OVERVIEW 3-1 Introduction 3-1 Literature Search Wethodology 1 3-3 Literature on the Eiconomic of Education 3-3 Literature on Cost4Benefi and Education Evaluation T eories 3-9 Literature onCosqBenefitApplications in Vocational Educahon r 3-10 Literature on Vocational Education Data Sources 3-14 4 REVIEW OF COST-BENEFIT ANALYSIS 4-1 Overview 4-1 -Analytic Approaches 4-1 Payback Period 4-4 Net Present Value 4-5 Benefit-Cost Ratio 4-7 Rate-of-Return 4-9 Summary 4-10 TABLE OF CONTENTS (Cont'd) Chapter Page COST- BENEFIT MEASUREMENT PROBLEMS 5-1 Overview General Measurement Problems 5-1 Measuring Student Units 5-1 Differences in Program Quality 5-6, Determining Comparison Groups 5-9 Level of Aggregation 5-13 Determining Appropriate Discount Rates 5-13 Private and ,.Social Costs and Benefits 5-15 Limitations in Vocational EduCation Data Sources 5-17 General Limitations 5-19 State and Sub-State Data 5 -20 Federal Data Sources 5-21 -Problems in Measuring Vocational Education Costs 5-23 Joint Costs 5-23 Capital Costs 5-26 Opportunity. Costs 5-28 Problems in Measuring Vocational Education Benefits . 5-29 Educational Investment Versus Consumption 5-29 Income Measures 5-31 Earnings Multiplier Effect 5-33 Non-Pecuniary Benefits 5-33 A COST-BENEFIT MODEL OF VOCATIONAL EDUCATION 6-1 Introduction 6-1 . Utility of a Cost-Benefit Model 6-1 Format of a Cost-Benefit Model 6-2 Strategy for Model Development 6-5 Stage One - Identify Model Requirements 6-5 Stage Two - Identify Anticipated Problems 6-5 Stages Three and Four - Specify and Evaluate Theoretical Sub-Models and Theoretically Complete Global Model. 6-7 iv 5 TABLE OF CONTENTS (Cont'd) Chapter Page 6 Stage Five - Assess Feasibility of Operationalizing (Cont'd) Model 6-7 Stage Six - Identify Variables in Operational Model . 6-7 Stages Seven and Eight - Identffy Interrelationships between Variables in Operational Model and Create Hierarchy of Sub-Models 6 -8 StagrNiTT=7TiiiiiiTions of Operational Model or Sub-Models '6-8 Stages Ten, Eleven, Twelve, Thirteen, and Fourteen - Field Test Operational Model or Sub - Models, Identify UtilizationStrategy, Implement Model(s), Evaluate Model(s), Make Recommendations 6-8 The Beginnings of a Model Specification 6-9 Delphi Analysis 6-14 Description of the Delphi Methodology 6-15 Delphi Results 6-20 Results on General Study Design 6-21 Results on Measurement Issues 6-23 Results on Data Availability 6 -26 7 RECOMMENDATIONS AND CONCLUSIONS 7-1 Introduction 7-1 Feasibility of Performing a National Study 7-1 Utility of Performing a National Study 7-3 Recommendations for a National Cost-Benefit Study 7-4 Funding Limitations 7-4 User GrOups 7=5 Data Problems 7-6 Modeling Considerations 7-7 Measurement Problems 7-7 C v TABLE OF CONTENTS (Cont d) Appendix Page A Literature Abstracts A-1' B Bibliographies -B-1 C Glossary C-1 0 List of Delphi Panelists D-1 E Delphi Survey Package E-1 F Results of Delphi Analysis and Panelists' Comments F-1 G List ,of Participants at Third Round Delphi Conference . G+1 H Agenda for Third Round Delphi Conference H-1 / LIST OF TABLES Number Page 4.1 Comparison of 'investment Options Using the Simple Net . / Benefit and Simple Benefit-Cost Ratio Evaluation Methods. 4-2 . 4.2 Comparison of Investment Options Using the Payback Period Evaluation/Methodology 4-5 4.3 Comparison of Investment Options Using the Net Present Value Evaluation Methodology 4-6 4.4 Comparison of Investment Options Using the Rate-of-Return Evaluation Methodology . 4-11 6.1 A Partial Listing of Potential Variables in a Cost-Benefit Model of Vocational Education 6-13 / 6.2 An Explanation of the Evaluation System Used in the Delphi Questionnaires - 6-19 / 72 / I LIST OF FIGURES 3.1 Lite/ ature Review Methodology 3-4 6.1 Interrelationships Between the Theoretical Sub-Models, i . Theoretically Complete Global Model, Operational Global. / Model, -and.Operational Sub-Models 6-3 6.2 Tie Cost-Benefit Model Development Process 6-6 vii ACKNOWLEDGEMENTS The authors of this report are grateful to numerous people who provided insight and technical expertise throughout the stud. Mr. Paul Geib, U.S. Department of Education, Office of Vocational and Adult Education, served as Project Director. His support throughout the research is greatly appreciated. Dr. Gary Meers, Director, Special Vocational Needs, The Center for Vocational Teacher Education, University of Nebraska, and Dr. Robert Thrall, Professor and Chairman, Department of Mathematical Sciences, Rice University, were consultants to the project staff. They provided significant technical guidance to the study and their efforts are gratefully acknowledged. The study team thanks all members of the project Technical Advisory Committee for their insightful contributions. They are Dr. Kern Alexander, Institute for Educational Finance, University of Florida; Dr. George Hagerty, Advocate for Vocational Career. Education, Division of Personnel Preparation, U.S. Department of Education; Dr. Jin Eun Kim, Assistant Professor of Educa- tional Administration, School of Education, Catholic University of America; and Dr. L. Allen Phelps, Associate ProfeSsor, Department of Vocational and Technical' Education, University of Illinois. Gratitude is expressed toward the following people who provided valuable input into the research effort: Dr. Don Gentry, State Director of Vocational Education, Indiana State Board of Vocational and Technical Education; Dr. Charles Hopkins, Assistant State Director for Supportive
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