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Equity weighting increases valuations when using real-world data

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  • Burlile, Austin
  • Maniloff, Peter

Abstract

Environmental economists have long debated whether and how to appropriately integrate distributional concerns into cost benefit analysis. Recent White House guidance instructs U.S. government analysts to weight different groups’ costs and benefits according to their incomes. Groups with incomes below the median would have weights above one, while groups with incomes above the median would have weights below one. We explore the impact of this method. We find that the average weight is above one in a policy-relevant setting. In this example, weighting increases the magnitude of monetized costs and benefits. The average weight varies with the unit of analysis and the choice of unit of analysis can change the sign of the net benefits.

Suggested Citation

  • Burlile, Austin & Maniloff, Peter, 2024. "Equity weighting increases valuations when using real-world data," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    • Handle: RePEc:eee:jeeman:v:128:y:2024:i:c:s0095069624001414
    DOI: 10.1016/j.jeem.2024.103067
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    1. Spencer Banzhaf & Lala Ma & Christopher Timmins, 2019. "Environmental Justice: The Economics of Race, Place, and Pollution," Journal of Economic Perspectives, American Economic Association, vol. 33(1), pages 185-208, Winter.
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    Cited by:

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