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Why Is Cost-Benefit Analysis So Controversial?

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  • Frank, Robert H

Abstract

The cost-benefit principle says we should take those actions, and only those actions, whose benefits exceed their costs. For many, this principle's commonsensical ring makes it hard to imagine how anyone could disagree. Yet critics of cost-benefit analysis are both numerous and outspoken. Many of them argue that cost-benefit analysis is unacceptable as a matter of principle. I begin by noting why many find this argument largely unpersuasive. I then examine several conventions adopted by cost-benefit analysts that do appear to yield misleading prescriptions. Finally, I consider the possibility that the cost-benefit principle may itself suggest why we might not always want to employ cost-benefit analysis as the explicit rationale for our actions. Copyright 2000 by the University of Chicago.

Suggested Citation

  • Frank, Robert H, 2000. "Why Is Cost-Benefit Analysis So Controversial?," The Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 913-930, June.
    • Handle: RePEc:ucp:jlstud:v:29:y:2000:i:2:p:913-30
    DOI: 10.1086/468099
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    Cited by:

    1. Heidi Peterson, 2023. "Cost–Benefit Analysis (CBA) or the Highway? An Alternative Road to Investigating the Value for Money of International Development Research," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(2), pages 260-280, April.
    2. Cheney Shreve, 2016. "Economic Efficiency or Gender Equality: Conceptualizing an Equitable “Social Framing” for Economic Evaluations to Support Gender Equality in Disaster Risk- and Environmental-Management Decision-Making," Resources, MDPI, vol. 5(3), pages 1-16, July.
    3. Daniel M. Hausman, 2012. "Why Satisfy Preferences?," Papers on Economics and Evolution 2011-24, Philipps University Marburg, Department of Geography.
    4. Derek Linton, 2024. "The Uncertainty Problem in Cost-Benefit Analysis Expanded: A Current Review," Journal of Economic Impact, Science Impact Publishers, vol. 6(1), pages 21-26.
    5. Jolanta Bijańska & Krzysztof Wodarski & Aneta Aleksander, 2022. "Analysis of the Financing Options for Pro-Ecological Projects," Energies, MDPI, vol. 15(6), pages 1-30, March.
    6. Ayat Al Assi & Rubayet Bin Mostafiz & Carol J. Friedland & Robert V. Rohli & Arash Taghinezhad & Md Adilur Rahim, 2023. "Cost-effectiveness of federal CDBG-DR Road Home Program mitigation assistance in Jefferson Parish, Louisiana," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 117(2), pages 1291-1319, June.
    7. Olof Johansson-Stenman, 2005. "Distributional Weights in Cost-Benefit Analysis—Should We Forget about Them?," Land Economics, University of Wisconsin Press, vol. 81(3).
    8. Zerbe, Richard, 2023. "The assignment of rights under economic or legal uncertainty," MPRA Paper 121295, University Library of Munich, Germany, revised Jun 2024.
    9. Bills, Tierra S. & Walker, Joan L., 2017. "Looking beyond the mean for equity analysis: Examining distributional impacts of transportation improvements," Transport Policy, Elsevier, vol. 54(C), pages 61-69.
    10. Johansson-Stenman, Olof, 2001. "Should We Use Distributional Weights in CBA When Income Taxes Can Deal with Equity?," Working Papers in Economics 35, University of Gothenburg, Department of Economics.
    11. El Hadj Matar Gueye & Adel Badri & Bryan Boudreau-Trudel, 2021. "Sustainable development in the mining industry: towards the development of tools for evaluating socioeconomic impact in the Canadian context," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(5), pages 6576-6602, May.
    12. Zug, Sebastian, 2008. "The Impact of Agricultural Mechanisation on Poverty Alleviation in a Seasonal Environment: a project evaluation from northern Bangladesh," IEE Working Papers 188, Ruhr University Bochum, Institute of Development Research and Development Policy (IEE).
    13. King, Julian, 2021. "Expanding theory-based evaluation: Incorporating value creation in a theory of change," Evaluation and Program Planning, Elsevier, vol. 89(C).
    14. Mouter, Niek & Annema, Jan Anne & Wee, Bert van, 2013. "Attitudes towards the role of Cost–Benefit Analysis in the decision-making process for spatial-infrastructure projects: A Dutch case study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 58(C), pages 1-14.
    15. Mouter, Niek, 2017. "Dutch politicians’ attitudes towards Cost-Benefit Analysis," Transport Policy, Elsevier, vol. 54(C), pages 1-10.

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