Cost–Benefit Analysis and Distributional Preferences

Cost–Benefit Analysis and Distributional Preferences

A Choice Modelling Approach

Helen Scarborough and Jeff Bennett

Advancing the incorporation of equity preferences in policy analysis, this book demonstrates the application of choice modelling to the estimation of distributional weights suitable for inclusion in a cost–benefit analytical framework. A platform for discussion of the challenges and opportunities of this approach is presented in the form of a detailed case study designed to estimate community preferences for different intergenerational distributions. While the case study is focused on natural resource management and environmental policy, the conceptual and methodological advances illustrated by the authors are relevant and applicable to a wider array of policy deliberations.

Foreword

Helen Scarborough and Jeff Bennett

Subjects: economics and finance, environmental economics, public finance, public sector economics, valuation, environment, environmental economics, valuation

Extract

The times are ripe for some serious grappling with issues of distributional equity. Harsh austerity measures are being imposed on ordinary people in resource-poor countries on the periphery of Europe at the behest of the overpaid international bankers who caused the global financial crisis in the first place. In the US, the Tea Party movement, fragmented as it is, includes billionaires who fund disaffected ordinary people to demand public sector frugality that would surely make their own lots in life more difficult. All of this is happening at a time when the distribution of income and wealth in the more prosperous countries is wider than it has been for a century. A growing sense of global limits under pressure is colliding with the customary optimism that future generations will have things better than their predecessors, and ordinary citizens are responding with everything from green politics to ‘shoot the messenger’ climate scepticism. So, what better time for a book demonstrating that familiar methods of nonmarket valuation can be adapted readily for learning about the preferences of ordinary people regarding intergenerational distribution? Helen Scarborough and Jeff Bennett have produced a work that is genuinely path-breaking. As is often the case with path-breaking work, the idea is simple enough: if people can respond to choice experiments in ways that tell us a lot about what they value and how much they value it, why would they not be able to respond to choice experiments where the options offered have different distributional consequences? Such...