Optimal Budget Generator: Evidence-Based Budget Allocation Framework

Abstract: 20-40% of public spending is misallocated relative to outcome-maximizing benchmarks. This represents \$8-16 trillion annually in potential welfare gains. Budget processes respond to lobbying intensity and historical precedent rather than comparative effectiveness evidence. The Optimal Budget Generator combines two evidence sources for each spending category. Diminishing returns modeling: where does spending hit saturation? Cost-effectiveness analysis: what's the marginal impact per dollar? Where methods agree, confidence is high. Where they diverge, uncertainty is quantified. Each category gets an optimal spending level with a Budget Impact Score (study quality × statistical precision × temporal recency) measuring confidence. Output: gap analysis showing which categories are over- or underfunded relative to evidence-based benchmarks. Summary: The Optimal Budget Generator (OBG) answers: 'How should we allocate the budget to maximize welfare?' using two metrics: real after-tax median income growth and median healthy life years. Unlike isolated spending targets, OBG generates integrated budget recommendations that account for tradeoffs between categories. The Budget Impact Score (BIS) measures confidence in each category's target.