Cost and resources

Theorymaker provides various ways of dealing with costs. Just as Actors try to maximise Value, they will try to avoid or minimise Costs. Costs are marked with a purple frown symbol in Theorymaker.

Something valued, influenced by the input !valued

 v: Some input, which costs !cost

 c: Some other input, which also costs !cost

We can think of cost Variables as just being a kind of Variable which makes a negative contribution to a Value Variable.

Costs can be directly summarised as negative Value using a Rule. This is the approach taken in Cost-Benefit Analysis (King 2016). (This is sometimes expressed as saying that cost and benefit are recorded “in the same units”, though this isn’t really the point - height and width are expressed in the same units but they aren’t the same Variable.) The point of CBA is actually to combine Value and Cost into one Variable, e.g. as a difference or a ratio.

!Rule Overall value (v-c) !valued

 Some outcome, influenced by the input 

 v: Some input, which costs !cost

 c: Some other input, which also costs !cost

Limited resources, for example within a Project once it has started, can be modelled using constraints, e.g.

-Constraint: sum of i1 and i2 must not exceed 400 USD



Some outcome !valued

 i1: some input ((positive USD))

 i2: some input ((positive USD))

!do Variables are sometimes called “inputs” or “input variables”, especially when some kind of cost is associated with them. Are !do Variables always “inputs”? Well, maybe. Implementing agencies carry out all kinds of activities like lobbying formally and informally which are sometimes not counted as inputs, perhaps because they are not so obviously associated with the financial cost. There is no reason not to include all of these in a Theory of Change.

(Need to talk about the relationship between cost and value, and cost and resources.)

In the business world, many kinds of cost and value are to be measured in actual money units. In this sense cost is just the reverse of value.

!Rule Overall value (v-c) !valued

 Something valued, influenced by the input !valued

 v: Some input, which costs !cost

  c: Some input, which costs !cost 

In this diagram, a defined Variable which is (partly) based on another which is valued is also marked as valued. [We may want to explain how Theorymaker native speakers deal with this].

Resources and constraints

Limited resources can be modelled using constraints, e.g.

-Constraint: sum of i1 and i2 must not exceed 400 USD





Some outcome !valued

 i1: some input ((positive USD))

 i2: some input ((positive USD))

Modelled in this way, constraints are as rigid as physics - there is no possibility of a constraint being broken.

Costs and constraints become very important when we look at adaptive systems, in which an Agent has a certain amount of, but not unlimited, freedom to implement Interventions.

Cost and negative value

Where possible, it is easier to formulate a Theory of Change in terms of positive values. However sometimes this isn’t easy:

Wife's level of anger (how to represent the negative value?)

 Husband attempts to rectify situation

We could do something like this, inverting the anger Variable, but it can still be confusing:

Wife's lack of anger !Value !Rule  !down

 Husband attempts to rectify situation

Probably we should give up and do this:

Wife's level of anger ((hi-lo)) !Cost

 Husband attempts to rectify situation

… though this solution does use the same symbol as for Cost.

References

King, Julian. 2016. “Using Economic Methods Evaluatively.” American Journal of Evaluation, 1–13. doi:10.1177/1098214016641211.