On Balance

The opinions expressed in "On Balance" posts are those of the individual authors and do not represent the views of the Society for Benefit-Cost Analysis or other organization. The Society is open to proposals for posts on opposing views.

This year, for the first time, I attended the Annual SBCA Conference, which was held in Washington, D.C. on March 14-16, 2018. As a relatively new member of the SBCA community and first time SBCA Conference attendee, I was delighted by the breadth and depth of the presentations and discussions. The breadth was evident in the range of topics, which ranged from underlying theory to practical analysis to policy implications.

Report from the SBCA President on the 2018 Annual Conference and The Plenary Presentation by Tomas Philipson

By Don Kenkel

It was my honor to preside over the 2018 Society for Benefit-Cost Analysis (SBCA) Conference  held March 14 – 16 at the George Washington University in Washington, DC. I am happy to report that by all indications it was another successful conference. We had 319 total registrants from 19 countries across 5 continents. U.S. participants represented 31 states and D.C. Half of all participants were affiliated with the U.S. federal government. The next largest group were academics (almost one-third); other attendees were from the private sector or from state and international government agencies. The three pre-conference professional development workshops were well attended and also drew a mix of participants from federal, state, and international agencies, as well as academics.

 April 26, 2018

By Henrik Andersson 



Despite the obvious attraction of Benefit-Cost Analysis (BCA) for policy evaluation, its implementation rate varies across countries and sectors.  A Symposium in the Spring 2018 Issue of the Journal of Benefit Cost Analysis explores how BCA is being applied in different sectors, countries, and institutional settings in Europe.   The Symposium articles support the generally held view that Europe lags behind the United States when it comes to using BCA for policy evaluation. However, the past couple of decades have seen a change, with BCA becoming more accepted and more widely implemented in European policy making, at both the national and European levels.  This post by Henrik Andersson discusses the findings of the Symposium articles, which also identify some of the challenges in implementing this evaluation tool in actual decision making.

 

                                      

  April 11, 2018

  By W. Kip Viscusi

 Proper application of the value of a statistical life (VSL) is essential to preventing the systematic undervaluation of life throughout the world. This new post from W. Kip Viscusi       argues that the values used by government agencies to monetize prospective risk reductions should be consistent with the values estimated in the economic literature.  Doing so would   significantly increase the values used in many countries, such as the United Kingdom and Australia. Moreover, the values the United States assigns to fatalities in setting regulatory   sanctions are extremely low, which creates a disparity between the values used in setting regulations and the values used to enforce regulations. A more consistent approach would apply a value to sanctions that is comparable to the value used for VSL.

March 7, 2018 

By Elisabeth Gilmore

As a teacher of benefit-cost analysis (BCA), I find that current events often provide "teachable moments". The review by the current administration of the Clean Power Plan (CPP), a cornerstone of the Obama era climate change regulations, is one such event. Federal regulations that may have significant impacts on segments of the economy are subject to an assessment that contains a BCA. The CPP adopted under the Obama administration was accompanied by a finding that benefits exceeded costs. However, the revised estimates produced by the Trump administration indicate that costs exceed benefits. Each year, many students in my class question the usefulness of BCA in promoting good policy, often asking whether the BCA framework is too flexible, and therefore meaningless. Does this example support their skepticism? I am anticipating some tough questions from my students and here’s how I plan to answer them.As a teacher of benefit-cost analysis (BCA), I find that current events often provide "teachable moments". The review by the current administration of the Clean Power Plan (CPP), a cornerstone of the Obama era climate change regulations, is one such event. Federal regulations that may have significant impacts on segments of the economy are subject to an assessment that contains a BCA. The CPP adopted under the Obama administration was accompanied by a finding that benefits exceeded costs. However, the revised estimates produced by the Trump administration indicate that costs exceed benefits. Each year, many students in my class question the usefulness of BCA in promoting good policy, often asking whether the BCA framework is too flexible, and therefore meaningless. Does this example support their skepticism? I am anticipating some tough questions from my students and here’s how I plan to answer them.

February 12, 2017

By Barry Friedman 

The Journal of Benefit Cost Analysis and the Policing Project at New York University School of Law teamed up to host a symposium on the use of benefit-cost analysis in a domain in which it is all too absent: policing. (Policing tends to have many definitions, but generally we mean it here to refer to any use of force or surveillance of the populace for reasons of achieving public safety.) The goal of this Symposium on Benefit-Cost Analysis of Policing Practices, and the conference that preceded it, is to interest more scholars in working in this vital field, and to identify and begin to tackle some of the methodological challenges the field faces.

 

December 8, 2017

By Stuart Guterman

The Congressional Budget Office (CBO) plays an important role in the federal legislative process. CBO’s score on a given bill—that is, its estimate of how it would affect the federal budget deficit—can determine whether Congress decides to go forward with the bill, modify it to get a more favorable estimate, or simply drop it. Given their importance, debates over CBO’s scores and the methods they use to produce them can be as controversial as the bills that are being considered. While this controversy can be politically motivated (with advocates on either side of an issue arguing for a score that is more favorable to their position), it also stems from limited understanding of CBO’s intended role in the process—and reflects the difficulty of conducting analyses of benefits and costs in the context of policy decisions.

October 26, 2017

By David L. Weimer

Rational action lies at the heart of neoclassical economics. Sovereign consumers make choices that maximize their utilities. By observing the tradeoffs implicit in actual choices, or eliciting tradeoffs for hypothetical choices, benefit-cost analysts impute willingness to pay for desirable policy impacts and willingness to accept undesirable ones. Yet, it appears that sometimes consumers seem to make mistakes. The field of behavioral economics seeks to provide a more realistic psychological model of consumers and other economic actors that helps us understand apparent deviations from neoclassical rationality. The 2017 Nobel Memorial Prize in Economic Sciences recognizes Richard H. Thaler’s pioneering contributions to behavioral economics.

October 11, 2017

By Lynn A. Karoly

Since its founding in 2007, the Society for Benefit-Cost Analysis (SBCA) has sought to engage scholars and practitioners from across the world. The Society’s current rolls count members from 35 countries. In support of expanding the Society’s international scope, the SBCA co-sponsored a workshop on September 20, 2017—together with the University of Milan and the Centre for Industrial Studies (CSIL)—titled “The Role of CBA in Government Decisionmaking: International Perspectives.” The workshop was held in conjunction with the annual Milan Summer School on Cost-Benefit Analysis of Investment Projects organized by SBCA board member Massimo Florio and CSIL. 

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