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The Principles and Objectives of Cost-Effectiveness Analysis

Published online by Cambridge University Press:  04 July 2016

A. Stratton
A. Stratton*
Affiliation:
College of Aeronautics, Cranfield
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Extract

The terms “cost-effectiveness” and to a lesser degree “cost-benefit” analysis have become familiar words in the technical and national press, the former usually in relation to defence projects—the latter in relation to social projects, such as transport, power generation and building. Indeed, at the time of the last General Election the political correspondent of a national newspaper wrote, “Mr. Heath and Mr. Callaghan, Chancellor of the Exchequer, vied with each other in stressing the importance of cost-effectiveness, which used to be known as getting value for money”.

The apparently simple concept of “value for money” raises three important issues:

(i) how is “value” of defence and social projects quantified?

(ii) what is the “money” involved, i.e. what are all the relevant costs? and

(iii) what are the information and decision processes that are used in attempting to obtain “value for money“?

Type
Research Article
Information
The Aeronautical Journal , Volume 72 , Issue 685 , January 1968 , pp. 43 - 53
Copyright
Copyright © Royal Aeronautical Society 1968 

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