Padua Pilot

Including the costs of the case management team, the program managers, the financial assistance and other operating costs, Padua’s total cost per study participant is roughly, $22,950 (2016 USD). The cost estimate includes monthly expenses for program years 2015–18 provided by CCFW that include salary and wages, fringe and payroll taxes, professional fees (i.e., training), operating costs, an occupancy and use allowance, indirect costs, and financial assistance. Just over $3,000 of the total program cost is the difference in assistance received between the treatment and control groups, though this difference in costs does not account for any services or assistance received by the control group at other service agencies. Of the remaining approximately $19,900 in program costs, 82 percent is attributable to the total compensation (salary, wags, fringe, and payroll taxes) of the program staff.

To estimate fiscal savings, the paper follows Hendren and Sprung-Keyser (2020) by assigning tax-transfer rates from the paper based on the average earnings (conditional on positive) of the treatment group relative to a federal poverty line of $24,250 (the poverty threshold for a household of 4 in 2015). These rates are multiplied by the experimental estimates of earnings gains estimated using unemployment insurance wage records.

The estimated net fiscal cost of the program is $22,725 after removing fiscal savings stemming from earnings gains estimated over the five years after program start. Under the strong assumption that earnings gains persist through age 65 (roughly 28 years), the program’s net cost falls to $21,144 [$8,858, $33,225].

Dividing the WTP by the net cost, the paper gets an MVPF estimate of 0.18.

Unsurprisingly, the magnitude of the MVPF depends on the length of time that effects persist. Under the assumption that effects in year 5 persist for another 5 years, the MVPF increases to about 0.27 [-0.55, 1.58]. Similarly, under the stronger assumption that gains persist until retirement at age 65 (28 years after random assignment for the typical applicant), then the MVPF is around 0.50 [-1.21, 7.03].

The paper’s exploratory results on treatment effect heterogeneity suggest that the program could be more cost-effective if targeted to individuals who are more likely to benefit. Those who entered the program lacking employment but who had stable housing experienced larger gains in earnings in the five years following random assignment. The WTP estimate for this subgroup is $11,759, which translates into a larger MVPF estimate of 0.56 [-0.05, 1.4]. If these gains persist for another 5 years or until retirement, the MVPF estimate increases to 1.4 [-0.24, 5.33] or 5.86 [-0.63, \infty], respectively, for this targeted group.