Project Evaluations and Decision Processes
AbstractCost-benefit analysis have been attacked by many critics because of its implicit ethical assumptions. The normative content of the method is at odds with the common attitude that economists should analyze how to reach given goals, while determination of the goals should be left to the politicians. This paper presents a descriptive model of decision makers' behavior, demonstrating that rational, benevolent politicians will only in special cases accept the evaluation of projects resulting from a cost-benefit analysis. An alternative approach to project evaluation, which allows individual decision makers to rank projects in accordance with their own ethical views, is presented. In this framework, estimates of willingness to pay are generally not required. On the other hand, information about groups that are significantly affected by the project, as well as physical unit information on changes in the supply of public goods, is crucial.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 137.
Date of creation: Feb 1995
Date of revision:
Cost-benefit analysis; welfare judgements; information constraint.;
Find related papers by JEL classification:
- A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
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- Kjell Brekke & Hilde Lurå & Karine Nyborg, 1996. "Allowing disagreement in evaluations of social welfare," Journal of Economics, Springer, vol. 63(3), pages 303-324, October.
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