ABSTRACT
At the broadest and vaguest level, cost-benefit analysis may be regarded simply as systematic thinking about decision-aking. Who can oppose, economists sometimes ask, efforts to think in a systematic way about the consequences of different courses of action? The alternative, it would appear, is unexamined decision-making. But defining cost-benefit analysis so simply leaves it with few implications for actual regulatory decision-making. Presumably, therefore, those who urge regulators to make greater use of the technique have a more extensive prescription in mind. I assume here that their prescription includes the following views:
There exists a strong presumption that an act should not be undertaken unless its benefits outweigh its costs.
In order to determine whether benefits outweigh costs, it is desirable to attempt to express all benefits and costs in a common scale or denominator,
so that they can be compared with each other, even when some benefits and costs are not traded on markets and hence have no established dollar values.
Getting decision-makers to make more use of cost-benefit techniques is important enough to warrant both the expense required to gather the data for improved cost-benefit estimation and the political efforts needed to give the activity higher priority compared to other activities, also valuable in and of themselves.
