'What You See is All There is': The Importance of Heuristics in Cost-Benefit Analysis (CBA) and Social Return on Investment (SROI) in the Evaluation of Public Health Interventions

Health economists are currently debating, with some suspicion, the relative merits of cost-benefit analysis (CBA), grounded in theoretical welfare economics, and the proliferation of social return on investment (SROI), a pragmatic approach of developing a triple-bottom line (social, environmental and financial), but not grounded in welfare theory. We argue, in rather existential terms, that there is a need to understand the role of heuristics, or prior beliefs, in current 'best practice' in CBA and SROI. A taxonomy of CBA and SROI is presented, which summarises the origins of the methods, reporting guidance, publication checklist of quality of reporting, who is wanting these analytical approaches, and policy decision rule present. We argue that a bottom-up SROI is best thought of as localised CBA, building stakeholder involvement right into the framing of SROI, perhaps addressing or mitigating the effects of prior heuristics in top-down CBA. Behavioural CBA and social CBA recognise that people are not rational and that sources of value other than willingness to pay may best reflect social values. Standardisation of SROI and comparison with CBA may illuminate the role of prior heuristics and seek to better reflect social value in weighing up the costs and benefits of public health interventions at both a local and societal level.