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Why Benefit-Cost Analysis Is Widely Disregarded and What to Do About It

Author

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  • Robert Dorfman

    (Department of Economics, Harvard University, Cambridge, Massachusetts 02138)

Abstract

Three prominent shortcomings of benefit-cost analysis as currently practiced are (1) it does not identify the population segments whom the proposed measure benefits or harms, (2) it attempts to reduce all comparisons to a single dimension, generally dollars and cents, and (3) it conceals the degree of inaccuracy or uncertainty in its estimates.These defects impair the usefulness of benefit-cost studies, divert effort and attention away from the most useful information benefit-cost studies could convey, and risk misleading many readers. These faults can be corrected or avoided without much difficulty and to great benefit.

Suggested Citation

  • Robert Dorfman, 1996. "Why Benefit-Cost Analysis Is Widely Disregarded and What to Do About It," Interfaces, INFORMS, vol. 26(5), pages 1-6, October.
    • Handle: RePEc:inm:orinte:v:26:y:1996:i:5:p:1-6
    DOI: 10.1287/inte.26.5.1
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    Cited by:

    1. N. Womer & M.-L. Bougnol & J. Dula & D. Retzlaff-Roberts, 2006. "Benefit-cost analysis using data envelopment analysis," Annals of Operations Research, Springer, vol. 145(1), pages 229-250, July.
    2. Kuosmanen, Timo & Kortelainen, Mika, 2007. "Valuing environmental factors in cost-benefit analysis using data envelopment analysis," Ecological Economics, Elsevier, vol. 62(1), pages 56-65, April.

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