1. Multiple Effectiveness Units Scott Matthews 12-706 / 19-702

2. Admin Issues zProject 2 Returned today yDiscussed in class on Wed (read them over!) zHW 6 due Wednesday (optional) zTake-home final - last chance y2 periods yDec 9-11, Dec 12-14 (due 5 pm on 11, 14) yWill send “d-list signup emails” this afternoon yWill be distributed via e-mail, due in office

3. Mutiple Effectiveness Measures zSo far, we have considered externality problems in one of 2 ways: y1) By monetizing externality and including it explicitly as part of BCA y2) Finding cost, dividing by measured effectiveness (in non-monetary terms) zWhile Option 2 is preferred, it is only relevant with a single effectiveness

4. MAIS Table - Used for QALY Conversions Comprehensive Fatality / Injury Values Injury Severity1994 Relative Value MAIS1.0038 MAIS2.0468 MAIS3.1655 MAIS4.4182 MAIS5.8791 Fatality1.0

5. Single vs. Multiple Effectiveness zRecall earlier examples: yCost per life saved yCost per ton of pollution zWhen discussing “500 Interventions” paper, talked about environmental regs yHad mortality and morbidity benefits yVery common to have multiple benefits/effectiveness yUnder option 1 above, we would just multiply by $/life and $/injury values.. yBut recall that we prefer NOT to monetize and instead find CE/EC values to compare to others

6. Multiple Effectiveness  In Option 2, its not relevant to simply divide total costs (TC) by # deaths, # injuries, e.g. CE 1 = TC/death, CE 2 = TC/injury zWhy? yMisrepresents costs of each effectiveness zInstead, we need a method to allocate the costs (or to separate the benefits) so that we have CE ratios relevant to each effectiveness measure

7. Options for Better Method zUse “primary target” as effectiveness yAllocate all costs to it (basically what we’ve been doing) yNeed good justification to do so! zAdd effectiveness measures together yE.g., tons of pollution yIs as ridiculous as it sounds (tons not equal, lives not equal to injuries)

8. Improved Method zIn absence of more information or knowing better, allocate costs evenly yE.g., if 2 pollutants each gets 1/2 the cost (50%-50%) yEasy to make slight variations if new information or insight is available zCould use our monetization values to inform this (e.g., external cost values, $/life values, etc.)

9. Recall from previous lecture

10. Another Option zFor each effectiveness, subtract marginal cost/benefit values of all other measures from total cost so that only remaining costs exist for CE ratios yAgain could use median $ values on previous slide to do this yExamples..

11. Wrap Up zThere is no “accepted theory” on how to do this. zHowever when we have multiple effectiveness measures, we need to do something so we end up with meaningful results.