The Philosophical Foundations of Cost-Benefit

Abstract

In recent years, cost-benefit analysis (CBA) has become highly fashionable. High fashion is inevitably accompanied by controversy, which is evidenced by a substantial literature on the theoretical and practical problems of CBA. The sources of dissension centre upon (a) the philosophical foundations of CBA, (b) its foundations in economic theory, and (c) the serious problems encountered in actually applying the theory, even when the latter is agreed upon. An outline of the basic ideas of CBA will indicate the reasons for disagreement.