Some principles of cost-benefit analysis of family planning services in developing countries

Summary

A number of controversial issues are discussed, relating to the assessment of both costs and benefits of family planning services. All costs and benefits, whether accruing to society or the parents of the child whose birth is averted, and the child itself, should be included in the analysis, even if they cannot easily be measured or appear as externalities. Different rates of interest to be used in discounting to obtain present values apply to various items; these rates may vary between the commercial rates of interest and negative values. It is also shown that the costs of running a service include, in addition to current expenditure, not only basic investments, but also that the benefit accruing to society by averting births comprises a kind of investment, namely the amount spent on the subsistence of the child whose birth is averted before he would have started producing. Marginal values are to be preferred to average values for the calculation of costs and benefits. Thus, the costs of a family planning service should be expressed as the amount of money needed to avert one additional birth and the benefits as the amount saved by one additional averted birth. The latter cannot be measured by comparing the GNP per head when the birth is averted, with the situation when it is not. This can only be done by computing the excess of the child’s life-time consumption over his life-time production.