Actors, Capacities, Venues and Effects
New Horizons in Public Policy series
Edited by Andrew J. Jordan and John R. Turnpenny
Chapter 7: Cost–benefit analysis: a tool that is both useful and influential?
The recommendation that policymakers should go ahead with public policies and projects only if the benefits of these proposals outweigh the costs has a common-sensical appeal. Articulating this intuition more rigorously in policy formulation is the domain of cost–benefit analysis (CBA), or variants which draw on the same conceptual framework. There is an extensive academic literature on CBA, some of which may not use the term ‘cost–benefit analysis’ but instead refers to ‘benefit–cost analysis’, ‘policy evaluation’ or ‘project appraisal’. Numerous texts and manuals have appeared covering CBA generally (for example, Boardman et al. 2011), in developing countries (for example, Londero 2003) and applications such as environment (Hanley and Barbier 2009; Pearce et al. 2006). A number of characteristics make CBA distinctive as a policy formulation tool. Perhaps most notably, it is an attempt to quantify costs and benefits in monetary terms. This, in turn, relies on an assessment of how people whose wellbeing is affected by policy actions value those losses and gains.