IDEAS home Printed from
   My bibliography  Save this article

Cognition and Cost-Benefit Analysis


  • Sunstein, Cass R


Cost-benefit analysis is often justified on conventional economic grounds, as a way of preventing inefficiency. But it is most plausibly justified on cognitive grounds--as a way of counteracting predictable problems in individual and social cognition. Poor judgments, by individuals and societies, can result from certain heuristics, from informational and reputational cascades, from thinking processes in which benefits are "on screen" but costs are not, from ignoring systemic effects of one-shot interventions, from seeing cases in isolation, and from intense emotional reactions. Cost-benefit analysis serves as a corrective to these cognitive problems. In addition, it is possible to arrive at an incompletely theorized agreement on cost-benefit analysis--an agreement that does not depend on controversial arguments (for example, the view that willingness to pay should be the basis for all social outcomes) and that can attract support from a variety of reasonable views. There is discussion as well of the role of distributional weights and other equitable factors in cost-benefit analysis. The conclusion is that the best argument for cost-benefit analysis is rooted in cognitive psychology and behavioral economics. Copyright 2000 by the University of Chicago.

Suggested Citation

  • Sunstein, Cass R, 2000. "Cognition and Cost-Benefit Analysis," The Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 1059-1103, June.
  • Handle: RePEc:ucp:jlstud:v:29:y:2000:i:2:p:1059-1103

    Download full text from publisher

    File URL:
    Download Restriction: Access to the online full text or PDF requires a subscription.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Reint Gropp & John Karl Scholz & Michelle J. White, 1997. "Personal Bankruptcy and Credit Supply and Demand," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 217-251.
    2. Che, Yeon-Koo & Schwartz, Alan, 1999. "Section 365, Mandatory Bankruptcy Rules and Inefficient Continuance," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(2), pages 441-467, July.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Antony Millner & Hélène Ollivier, 2016. "Beliefs, Politics, and Environmental Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(2), pages 226-244.
    2. Wiktor L. Adamowicz, 2004. "What's it worth? An examination of historical trends and future directions in environmental valuation," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(3), pages 419-443, September.
    3. Zinaida M. Pogosova & M Nizhnik & Henry Penikas, 2015. "The Decision-Making Process in Punishment Imposition: Four Factors of Public Perception in Russia," HSE Working papers WP BRP 56/LAW/2015, National Research University Higher School of Economics.
    4. Lisa A. Robinson & James K. Hammitt, 2013. "Behavioral economics and the conduct of benefit–cost analysis: towards principles and standards," Chapters,in: Principles and Standards for Benefit–Cost Analysis, chapter 10, pages 317-363 Edward Elgar Publishing.
    5. Marquez, Pablo, 2006. "Cost Benefit Analysis, Value Of A Statistical Life And Culture: Challenges For Risk Regulation," MPRA Paper 2632, University Library of Munich, Germany, revised Feb 2007.
    6. repec:prg:jnlpol:v:2017:y:2017:i:4:id:1155:p:460-475 is not listed on IDEAS
    7. Johansson-Stenman, Olof, 2010. "Health Investments Under Risk And Ambiguity," Working Papers in Economics 443, University of Gothenburg, Department of Economics.
    8. Seth D. Baum, 2012. "Value Typology in Cost-Benefit Analysis," Environmental Values, White Horse Press, vol. 21(4), pages 499-524, November.
    9. Jussila Hammes , Johanna, 2017. "The impact of career concerns and cognitive dissonance on bureaucrats’ use of cost-benefit analysis," Working papers in Transport Economics 2017:5, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    10. Stavros A. Drakopoulos & Ioannis Theodossiou, 2016. "Workers’ risk underestimation and occupational health and safety regulation," European Journal of Law and Economics, Springer, vol. 41(3), pages 641-656, June.
    11. Treich, Nicolas, 2010. "The value of a statistical life under ambiguity aversion," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 15-26, January.
    12. Marija Bockarjova & Piet Rietveld & Erik T. Verhoef, 2012. "Composite Valuation of Immaterial Damage in Flooding: Value of Statistical Life, Value of Statistical Evacuation and Value of Statistical Injury," Tinbergen Institute Discussion Papers 12-047/3, Tinbergen Institute.
    13. Eric A. Posner & E. Glen Weyl, 2014. "Benefit-Cost Paradigms in Financial Regulation," The Journal of Legal Studies, University of Chicago Press, vol. 43(S2), pages 1-34.
    14. Brennan Timothy J., 2014. "Behavioral economics and policy evaluation," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(1), pages 1-21, January.
    15. Nerhagen, Lena, 2016. "Management by good intentions and best wishes: on sustainability, tourism and transport investment planning in Sweden," Working papers in Transport Economics 2016:4, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    16. Mouter, Niek & Annema, Jan Anne & Wee, Bert van, 2013. "Attitudes towards the role of Cost–Benefit Analysis in the decision-making process for spatial-infrastructure projects: A Dutch case study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 58(C), pages 1-14.
    17. Tasic Slavisa, 2011. "Are Regulators Rational?," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 17(1), pages 1-21, April.
    18. Jim Rose, 2001. "Greening the WTO's Disputes Settlement Understanding: Opportunities and Risks," Treasury Working Paper Series 01/28, New Zealand Treasury.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlstud:v:29:y:2000:i:2:p:1059-1103. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.