ABSTRACT
Benefit-cost analysis (BCA) is a framework for systematically displaying the consequences of alternative spending and regulations in such a manner that the ranking of these alternatives is the result of applying politically chosen rules reflecting explicit performance objectives. BCA can illuminate the character of the conflict and make it easier for observers to tell whether, once the conflict is settled, the resolution is in fact truly implemented. BCA is an efficiency analysis, whether of the independent Paretian type or the interdependent analyst-politician type. Some note of the relationship of BCA to policy analysis and other subdisciplines of economics is in order. Distributive decisions in BCA are first made in the choice of program information structure. A politically set price is an explicit price, whereas a politically chosen set of private market property rights and contract rules eventually produces an implicit price. The chapter also presents some closing thoughts on the key concepts discussed in the preceding chapters of this book.
