chapter  6
Measurement of benefits and costs: distributional considerations
WithJ. Schofield
Pages 10

This chapter addresses the issue of distribution between members of the generation. There are, in principle, three general ways in which distributional considerations may be integrated into decision making using cost–benefit analysis. First, decision makers may maximize aggregate efficiency subject to a constraint that minimum conditions be met regarding the distribution of income and wealth. The second approach reverses the first. Decision makers maximize a distributional goal, subject to an aggregate efficiency constraint. The third general approach to consideration of distributional matters is to maximize a multidimensional social welfare function. Decision makers maximize a weighted sum of net benefits accruing to different groups in society. Then for each sector the question is asked: 'What would be the difference in costs and benefits which would accrue under the respective schemes under examination?' The nature of the costs and benefits comprise all those which are of relevance to the planning decision.