Principles and Standards for Benefit–Cost Analysis

Principles and Standards for Benefit–Cost Analysis

Edited by Scott O. Farrow and Richard Zerbe, Jr.

Benefit–cost analysis informs which policies or programs most benefit society when implemented by governments and institutions around the world. This volume brings together leading researchers and practitioners to recommend strategies and standards to improve the consistency and credibility of such analyses, assisting analysts of all types in achieving a greater uniformity of practice.

Chapter 8: Ethical benefit–cost analysis as art and science: ten rules for benefit–cost analysis

Richard O. Zerbe Jr.

Subjects: economics and finance, public sector economics, valuation


Benefit–cost analysis (BCA) is commonly viewed either as a mechanical tool for making decisions or as a failed technique of decision-making that avoids moral, interactive, and ethical components. Properly situated, it is neither. Benefit–cost analysis is an art form that can produce useful information with the potential to improve decision-making. To understand this we must consider current criticisms and come to another way of looking at BCA. Benefit–cost analysis is widely seen as a rule by which preferences and emotions are valued, yet how can a maxim encompass these? It is hardly surprising then, that BCA is the object of longstanding and expansive contumely and even repugnance. Yet it is widely esteemed by practical people, “mere men of business,” one might say. To put it crudely, BCA is generally approved, but is apt to be disparaged by those of a philosophic mind who see it as “a lust” for “mechanical objectivity.”

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