ECONOMICS OF EDUCATION: What is the Cost Effective Analysis (CEA) and what is its application in today’s teaching environment?



8b iv). Discuss the Cost Effective Analysis (CEA) and its application in today’s teaching environment.

Cost Effective Analysis (CEA) consists of three steps:

  1. The costs of the alternatives must be carefully measured, e.g. expenditure on teacher salaries, books and learning materials in each school type.
  2. The outcomes or educational effectiveness of the alternative must be measured e.g. by standardized test scores of pupils in each school
  3. Cost and effectiveness measures are combined to calculate on cost-effectiveness ratios e.g. by dividing the effectiveness of each alternative by tis cost to show the unit cost of achieving a particular objective, such as 1 percent improvement in pupil achievement

Whereas CEA take to account the quality of education (as measured by achievement scores) CBA takes to account quantitative measures of schooling e.g. salary or years of schooling

The most cost-effectiveness alternative can then be identified for example the school that produces the greatest improvement for a given cost or alternatively the school where pupils achieve the required examination results at least cost



  • Measures of educational effectiveness can be those which a decision-maker would normally consider, such as improvement in student’s test scores.
  • Cost-effectiveness evaluations generally requires less time and other resources than CBA



  • Accurate measures of effectiveness can be just as problematic as the measures of benefits
  • A Person’s ability is not just a function of schooling
  • Education has multiple objectives and there is no single measure that adequately quantifies effectiveness

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