Social Decision-Making Analysis: A General Approach to Inform Decisions on Resources in the Public Sector.

Public expenditure aims to achieve social objectives by improving a range of socially valuable attributes of benefit (arguments in a social welfare function). Public expenditure is typically allocated to public sector budgets, where budget holders are tasked with meeting a subset of social objectives. Decision makers require an evidence-based assessment of whether a proposed investment is likely to be worthwhile given existing levels of public expenditure. However, others also require some assessment of whether the overall level and allocation of public expenditure are appropriate. This article proposes a more general theoretical framework for economic evaluation that addresses both these questions. Using a stylized example of the economic evaluation of a new intervention in a simplified UK context, we show that this more general framework can support decisions beyond the approval or rejection of single projects. It shows that broader considerations about the level and allocation of public expenditure are possible and necessary when evaluating specific investments, which requires evidence of the range of benefits offered by marginal changes in different types of public expenditure and normative choices of how the attributes of benefit gained and forgone are valued. The proposed framework shows how to assess the value of a proposed investment and whether and how the overall level of public expenditure and its allocation across public sector budgets might be changed. It highlights that cost-benefit analysis and cost-effectiveness analysis can be viewed as special cases of this framework, identifying the weakness with each. • Recently developed methods of economic evaluation account for the reality of a range of social objectives and multiple constrained public sector budgets, but fail to fully account for the implications of the private consumption value of attributes and do not address the broader questions of the appropriate level and allocation of public expenditure. • This study proposes a more general theoretical framework for economic evaluation highlighting that the valuation of attributes of benefit and the extent to which public expenditure affects them is necessary to address whether a proposed investment is good value and whether the level and allocation of public expenditure are appropriate. This framework exposes the assumptions embedded in cost-benefit analysis and cost-effectiveness analysis and identifies why neither address these questions adequately. • We provide a stylized example of a proposed investment in a simplified UK context with 2 public sectors (healthcare and Adult Social Care) and a private sector. We show that the information required to evaluate a proposed investment also provides an estimate of the marginal value of public funds across public sectors that can be used to inform broader public expenditure decisions. [ABSTRACT FROM AUTHOR]