Marginal Value of Public Funds — Canada

The Problem

When governments evaluate social programs, they typically ask one question: "What does this cost?" The tools currently used in Canadian policy analysis are built to count spending as a burden — they measure what it costs to raise a dollar of revenue, but say almost nothing about what that dollar does for people. The result is a systematic blind spot: housing supports, child benefits, and income transfers are routinely treated as expenses to be minimized, even when the evidence shows they do far more good than the price tag suggests.

The Approach

The Marginal Value of Public Funds (MVPF) asks a different question: "How much social value does this spending actually generate?" It measures the benefit that people receive from a program against what it costs the government — and it accounts for the fact that a dollar matters more to a low-income household than a wealthy one. An MVPF greater than one means a program produces more value than it costs. Some programs even pay for themselves over time through higher earnings, better health, and reduced demand for other services. This research applies that framework to Canada for the first time.

Partners & Funders

Full Strategic Partner

Maytree

Maytree is a Toronto-based human rights organization committed to advancing solutions to poverty and systemic inequality. As the full strategic partner on this project, Maytree supports the research program as funder, engages as a research collaborator shaping the questions and frameworks, and drives knowledge mobilization to bring findings into policy conversations across Canada.

Funder Research Partner Knowledge Mobilization

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Internship Funder

Mitacs Accelerate

Mitacs is a national research organization that fosters innovation in Canada through research and training programs. The Mitacs Accelerate grant supports Selvia Arshad's doctoral research internship on this project — bringing graduate-level econometric and welfare-theoretic expertise directly into the MVPF research program and connecting academic research to real-world policy application.

Internship Funder Graduate Research Support

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About This Research

When budgets are tight, social programs are the first to face cuts. But the tools governments use to evaluate those programs are stacked against them from the start. Canada's dominant approach to policy evaluation is built to measure the cost of raising revenue — and almost nothing else. It treats housing supports, child benefits, and income transfers as spending to be minimized rather than investments to be weighed against their returns. The result: programs that reduce poverty, improve health, and help families get ahead are routinely undervalued, because their benefits are never fully counted.

The problem runs deep. The standard metric assumes everyone responds to policy the same way — ignoring how outcomes differ by gender, income, family structure, and life circumstances. And in common practice, a blanket 50-cent penalty is added to every dollar of public spending to reflect "tax distortions," regardless of who the spending reaches or what it achieves. This is not a neutral technical choice. It is a thumb on the scale against programs that serve people with the least.

The Marginal Value of Public Funds offers a better way. Instead of asking "what does this cost?", the MVPF asks "how much social value does this spending actually generate?" It measures the benefit that people receive from a program against the net cost to government — accounting for long-run effects like higher future earnings, better health, and reduced need for other services. It also recognizes that a dollar is worth more to a low-income household, and builds that into the analysis. An MVPF greater than one means a program produces more value than it costs. Some programs, particularly those that help children and families, can even pay for themselves over time. This research is the first comprehensive effort to build and apply this framework across Canada's social programs.

Research Elements

Element 1

Tax Administration Reform

Introduces the MVPF-TAdmin framework for evaluating tax administration reforms across three dimensions: fiscal efficiency, distributional equity, and legitimacy. Applied to Canada's Automatic Federal Benefits initiative as a proof of concept, the framework asks whether the design quality of administrative reform generates positive or negative social returns — a question the MCPF cannot answer.

Forthcoming · Canadian Tax Journal

Element 2

Child and Family Benefits

Applies the MVPF to Canadian child and family programs — the Canada Child Benefit, its predecessors, and the federal childcare expansion — to provide the first benefit-inclusive comparative welfare analysis of these programs. The research draws on quasi-experimental variation in provincial and federal policy to isolate causal effects on maternal labour supply, child development, and long-run fiscal outcomes.

Active Research

Element 3

The Tax and Benefits System

Extends the MVPF to the broader architecture of Canada's integrated tax and transfer system, examining how program interactions — benefit clawbacks, effective marginal tax rates, and access gaps — shape the welfare value of the system as a whole. The analysis uses Statistics Canada's SPSD/M and the Canadian Tax and Credit Simulator to model complex tax-benefit interactions and their distributional consequences.

Active Research

Research Outputs

Active & Growing

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Beyond Cost and Yield — An MVPF-TAdmin Framework for Evaluating Tax Administration Reforms through Public Value, Equity, and Welfare

Selvia Arshad, Gillian Petit and Lindsay M. Tedds · Canadian Tax Journal · Accepted February 2026

Introduces the MVPF-TAdmin framework — a welfare-based lens for evaluating tax administration reforms across three dimensions: fiscal efficiency, distributional equity, and legitimacy. Applied to Canada's Automatic Federal Benefits initiative as a proof of concept, showing how design quality determines whether a reform generates positive or negative social returns.

ENABLE Forthcoming

⏳ Forthcoming

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From Cost to Investment: Reframing Social Spending in an Affordability Era

Gillian Petit and Selvia Arshad · IRPP · 2026

Argues that Canada's capital budgeting framework misclassifies social spending as operating expenditure, systematically undervaluing programs that build human and social capacity. Applies MVPF logic to reframe transfers and supports as social investment — analytically more honest and politically more tractable than austerity framing.

ENABLE Available

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Tax Welfare and Optimal Taxation

Lindsay M. Tedds · Chapter 15 in Public Finance in Canada, 7th edition · Nelson

Develops the full welfare architecture linking deadweight loss, the Marginal Cost of Public Funds, and the Marginal Value of Public Funds into a unified framework for tax design. The chapter introduces MVPF as the benefit-side complement to MCPF and situates both within optimal tax theory — from the Ramsey rule through Mirrlees — grounding the MVPF research program in core public finance pedagogy.

ENABLE Forthcoming

⏳ Forthcoming

Knowledge Mobilization

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Invest in people, strengthen finances: How a new measure can lead to better policy

Selvia Arshad in conversation with Scott Perchall · Maytree · April 2026

Features the MVPF project in a Maytree interview that walks readers through the core premise of the framework — that Canada currently evaluates social programs by their price tag with no comparable measure of the value those programs return — and situates the research in a fiscal moment where the framing matters for how governments and civil society make the case for social investment.

ENABLE Available

Read ↗ 📣 Announcement

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Beyond the Price Tag: Redefining How We Value Public Programs

Lindsay M. Tedds, Gillian Petit and Selvia Arshad · Research Poster · 2026

Visual overview of the MVPF research program — contrasting the traditional MCPF approach with the MVPF framework across primary focus, benefit valuation, and evidence base. Designed for conference and public engagement use.

View Poster ↗

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MVPF Explainer — Audio/Video Overview

Lindsay M. Tedds, Gillian Petit and Selvia Arshad · NotebookLM · 2026

An accessible audio and video explainer of the MVPF framework and its application to Canadian policy evaluation — produced for broad public and policy audience engagement.

Watch ↗

Interested in this research?

ENABLE Stream · INCLUSIECON · University of Calgary

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