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Voluntariness and the bounds of cost–benefit analysis

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  • Sugden, Robert

Abstract

Behavioural economists often claim that their policy recommendations are justified by cost–benefit analysis (CBA), but without adequate explanation of the methodology they have in mind. I sketch the outlines of a CBA methodology that is compatible with the findings of behavioural economics and is in accord with my account in Sugden (2018) of a well-functioning market as a network of opportunities for mutually beneficial transactions. The key idea is that the CBA of a project is concerned only with effects that are not transmitted through voluntary interactions. I illustrate this proposal by considering the appraisal of fuel economy mandates.

Suggested Citation

  • Sugden, Robert, 2023. "Voluntariness and the bounds of cost–benefit analysis," Behavioural Public Policy, Cambridge University Press, vol. 7(4), pages 954-962, October.
    • Handle: RePEc:cup:bpubpo:v:7:y:2023:i:4:p:954-962_8
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