In this scenario, the social costs and benefits of the evaluated actions are introduced into the MCA problem as “Social economic benefits” and “Social economic costs”, substituting the monetized and/or monetizable criteria, in this case “Burden of Disease” and “Cost” (i.e. governmental, as defined by stakeholders). The new criteria have the weights of the criteria they substituted.
Scenario 1 problem statement
The baseline (Scenario 0) is summarized in Table 29. Using that as a reference, this scenario is defined by the substitution of the criterion “Burden of Disease” by its monetized counterpart “SEB” and of the criterion “Cost” (i.e. governmental) by the social cost “SEC”. The new criteria have the weights of the criteria they substituted. The problem statement is laid out in Table 40.
114
Table 40. MCA Scenario 1 problem
Criterion Inclusion Pub.op. Enforce. Implem. Incent. SEB SEC
Preference fn. Usual Usual Usual Usual Usual Usual Usual
P, Q N/A N/A N/A N/A N/A N/A N/A
Units N/A N/A N/A Years N/A M S/. M S/.
Optimization MAX MAX MAX MIN MAX MAX MIN
Weights 0.1348 0.1124 0.1551 0.1865 0.1079 0.1910 0.1124
A1 renewal 1.80 1.60 3.80 5.77 2.40 1159 8131
A2 scrapping 2.60 3.80 2.40 6.63 2.00 8805 5122
A3 VNG 4.20 4.40 3.80 6.36 4.80 1326 389
A4 maintenance 2.40 3.00 3.00 6.52 2.40 10888 1280
Green: best performing; Red: worst performing
Scenario 1 MCA prioritization
The modification of the prioritization of the actions under the new criteria may change the overall MCA prioritization of the actions from Scenario 0 to Scenario 1. In order to test that possibility we need to examine the PROMETHEE flows (Table 41):
Table 41. PROMETHEE ranking and flows in Scenario 0 and Scenario 1
Scenario 0 Scenario 1
Ranking Action Phi Phi+ Phi- Phi Phi+ Phi-
1 A3 - VNG 0,3446 0,6464 0,3019 0,5693 0,7588 0,1895 2 A4 - Maintenance 0,1071 0,5356 0,4285 0,0322 0,4981 0,4659 3 A1 - Renewal -0,1108 0,4008 0,5116 -0,2607 0,3258 0,5865 4 A2 - Scrapping -0,3409 0,3296 0,6704 -0,3409 0,3296 0,6704
Scenario 1 discussion
Some of the characteristics of Scenario 1 do not differ essentially from Scenario 0. Firstly, the number of criteria and the relative weight of each one of them is unchanged. And secondly, the monetary value of the “Burden of Disease” criterion is roughly proportional to it and yields the same uni-criterion prioritization (see Table 42), so the substitution of the criterion “Burden of Disease” by a new criterion “SEB” (Social Economic Benefit) with equivalent weight is, by itself, unlikely to make a difference in outputs under the PROMETHEE method.
Table 42. Burden of disease (DALYs) avoided by each action, and its economic valuation
Action BoD (DALYs) SEB (Million S/.)
A1 - Renewal 7623 1159
A2 - Scrapping 55169 8805
A3 - VNG 8308 1326
A4 - Maintenance 68226 10888
115
On the other hand, the criterion “Cost” as specified in Scenario 0 includes only governmental costs of the interventions but not their social costs. Therefore, the new criterion “SEC” represents a true modification of the original MCA problem (see Table 43, below)
Table 43. Governmental and social cost of each action, in Millions S/.
Action Cost (Scenario 0) SEC (Scenario 1) Difference SEC-Cost Ratio Cost/SEC (%) A1 - Renewal 15.00 8131 8116 0.18 A2 - Scrapping 53.96 5122 5068.04 1.05 A3 - VNG 80.00 389 309 20.56 A4 - Maintenance 4.31 1280 1275.69 0.33
Green: best performing; Red: worst performing
What does this entail for the prioritization of actions in the application of Scenario 1?
As mentioned, the number of criteria and the relative weights of each are unchanged, so the differences in preference flow are strictly due to differences in performance. Performance-wise, the substitution of health benefits (BoD) by their monetized equivalent (SEB) cannot change the prioritization of the actions in Scenario 1 compared with Scenario 0. On the other hand, the shift from governmental cost (Scenario 0) to Social cost (Scenario 1) modifies the prioritization of the actions under the new “SEC” criterion. However, the effect of this modification is not sufficient to change the overall MCA prioritization of actions. That is, the substitution of governmental costs by social cost and of health benefits by their monetized equivalent does not change the prioritization of the actions.
The realization of the large proportion of the social cost that is externalized to individuals (Table 43) is, in itself, a valuable input for decision-making in this case. Given that the governmental costs are from the societal point of view mainly a redistribution of resources, social costs were used in the CBA. However, in the MCA, the stakeholders placed the utmost importance to the cost borne by the government. Using the MCA results alone would have clear consequences in terms of social costs unaccounted for: A1 would be very cheap for the government but the absolute cost for society would be comparatively the highest; the government would bear just 0.18% of the social cost of the action. On the other hand, Action A3 (VNG) would be even more desirable after considering its social costs. Albeit comparatively expensive for the government, its social cost would be the lowest. Moreover, the government could claim to be bearing over 20% of the social cost of A3.
While the proportion of the social cost of the actions that should be borne by the government is debatable, only the evaluation of social vs. governmental costs would allow a fair comparison of the alternatives. Also of interest is the fact that the subjective evaluation of the actions by the stakeholders (reflected in this case by the non-monetizable criteria) is more consistent with their optimality in terms of (low) social cost that it is with the governmental cost. This is illustrated in Figure 25, which shows the GAIA planes of the MCA scenarios 0 and 1.
116
117
In the original MCA (Scenario 0, top) the decision axis confirmed A3 as the best preferred option even though it performed badly in “Cost” and “BoD”, namely the monetizable criteria. In Scenario 1 the social costs are better aligned with some of the subjective criteria as evaluated by the stakeholders than the governmental cost was. Despite these insights, it is arguable that including social benefits and costs as separate criteria in a MCA framework actually captures the CBA information wholly, since the value of the technique lies in the synthetic power of reporting benefits per unit invested, or net benefits.