ABSTRACT
A society consists of a large number of individuals; a proposed project will typically be advantageous to some of them and disadvantageous to others. One of the main purposes of CBA is to provide a systematic way of weighing such advantages and disadvantages against each other. From the previous chapter, we know that the utility change for a single individual is proportional to this person’s net benefits, i.e., his net willingness to pay for the project. It may thus seem reasonable to assume that the welfare change for society as a whole, due to a project, is proportional to the sum of all individuals’ net benefits, or aggregate net willingness to pay. This presumption, however, is only correct under rather particular – and controversial – assumptions. The purpose of the present chapter is to point out those assumptions and their implications.
