We are doing a study of the counterfactual scenario in CBA. We are using empirical data from a large number of completed CBAs and, most likely, interviews with analysts and decision-makers. Some countries have guidelines that set out what the do-minimum scenario should include. I would also like to review relevant scientific literature on this issue, but I am struggling to find any studies. Tips on both guidelines and studies would be much appreciated.
I do not know your context. I have guessed in general and trying to support. You can try to contextualise -https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/938046/The_Green_Book_2020.pdf
https://unece.org/DAM/trans/doc/2008/wp5/CBAe.pdf
Koustuv Dalal, thank you! Yes, I am aware of the UK Green book. We shall be exploring guidelines in some countries such as the UK, Sweden etc. So far I am struggling to find any scientific literature though. Maybe an indication that research is needed!
Some authors use the term comparator rather than counterfactual. A subset of the literature you want deals with noninferiority trials which "are intended to show that the effect of a new treatment is not worse than that of an active control by more than a specified margin." Some textbooks talk about the counterfactual, but I'm unsure if that's as scientific as you desire. For example, on page 643 in [Miller TR, Hendrie D. Economic Evaluation of Injury Prevention and Control Programs. In G Li, S Baker (ed.), Injury Research: Theories, Methods and Approaches, New York: Springer, 641-666, 2012.] we state "The options being compared must be relevant to the choices facing decisionmakers. and characteristics of these choices must be well-defined. The types of characteristics that need to defined will depend on the analysis but include the nature of the interventions, the target population, the setting or delivery site, and the time period over which the costs and effectiveness will be evaluated." The widely cited Panel report, Cost-Effectiveness in Health and Medicine, ed. Gold et al., Oxford University Press, 1996 has a nice section on comparators on pages 63-66. Two books on benefit valuation that I think do a thorough job on thinking through the counterfactual are Manning WQ et al., The Costs of Poor Health Habits, Harvard University Press, 1991. and Cook P, Ludwig J. Gun Violence: The Real Costs, Oxford University Press, 2000. An excellent analysis of some key counterfactual issues, notably deadweight loss (i.e., the inefficiency of tax-funded expenditure) and the minimal trickle-down value of job creation, appears in the old but exemplary Gramlich E. Benefit-Cost Analysis of Government Programs, Prentice-Hall, 1983. Finally you should look at the benefit-cost methods document supporting the Washington State Institute for Public Policy's hundreds of comparably computed BCAs. (technical documentation link and possibly other links here http://www.wsipp.wa.gov/BenefitCost?topicId=9 )
You can use various methods to evaluate the Benefit-cost analysis. These include partial budget analysis, enterprise budget analysis, and the whole firm budget analysis. The analysis can be supported using the payback periods, the benefit-cost ratio (BCR), and the Marginal Rate of Return (MRR) analysis technique.
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