Abstract
Benefit-cost analysis has, in many policy contexts, been considered any analytical method that enumerates the advantages and disadvantages of alternative actions.1 When interpreted in strict economic terms, it is a pragmatic realization of the theory of welfare economics, providing a specific organizing framework and a set of procedures to summarize information and display the tradeoffs associated with these actions — generally in monetary terms. While a number of past descriptions of the analysis have been so general as to permit many different types of methods for evaluating actions under the heading of benefit cost analysis (BCA), this chapter focuses on the narrowest of these interpretations — the strict economic conception. In this setting, BCA judges actions based on an efficiency criterion. Positive aggregate net benefits imply the prospects for an improvement in the resource allocation (over the status quo). Anything else does not!
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Smith, V.K. (1986). A Conceptual Overview of the Foundations of Benefit-Cost Analysis. In: Bentkover, J.D., Covello, V.T., Mumpower, J. (eds) Benefits Assessment. Technology, Risk, and Society, vol 1. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-4524-1_2
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DOI: https://doi.org/10.1007/978-94-009-4524-1_2
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