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A Comparison of Benefit Cost and Cost Utility Analysis in Practice: Divergent Policies in Sweden

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  • Hultkrantz, Lars

    () (Department of Business, Economics, Statistics and Informatics)

  • Svensson, Mikael

    () (Department of Economics)

Abstract

We compare state-of-the-art implementation of Benefit Cost Analysis (BCA) and Cost Utility Analysis (CUA) as tools for making priorities in allocation of national public funds in the transport sector and health sector, respectively, in Sweden. While the principal distinctions between these methods are well known, less notice has been given to a number of other differences that have emerged as national and international practices have evolved over time along separate lines. We compare cost and benefit components and economic parameter values and find some surprising disparities. There are inconsistencies, both across methods and within each method. Both can be improved by learning from the other. We also find that some current practices conflict with the underlying welfare theory and/or insights from recent empirical analysis.

Suggested Citation

  • Hultkrantz, Lars & Svensson, Mikael, 2012. "A Comparison of Benefit Cost and Cost Utility Analysis in Practice: Divergent Policies in Sweden," Working Papers 2012:5, Örebro University, School of Business.
  • Handle: RePEc:hhs:oruesi:2012_005
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    Keywords

    Benefit Cost Analysis; Cost Utility Analysis;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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