On Balance

February 27, 2020

By: Doramas Jorge-Calderón

How much impact is your economic appraisal leaving out?” This is the perennial question that CBA practitioners face when putting forward their results of, normally, a poorly performing project. In investment appraisal, my area of work, the question is often decisive. I presume the same applies to CBA practice in policy appraisal.

February 12, 2020

By: Glenn Blomquist

Outer space probes, radio telescopes, large particle accelerators, genomic platforms, and similar entities are fascinating focal points of intellectual curiosity and discovery.  While we marvel at what we learn from them, we can be taken aback by their costs.  The $150 billion cost for the International Space Station has been shared by taxpayers in the United States, Europe, Russia, Japan, and Canada.  The Large Hadron Collider near Geneva, Switzerland that enabled the 2012 discovery of the elusive Higgs Boson is estimated to cost about 13.5 billion Euros over the 1993-2025 period for taxpayers in the participating countries.  According to a recent article in The Economist, proposals are being made to build new infrastructures: A Future Circular Collider in Switzerland, an International Linear Collider in Japan, and a Circular Electron-Position Collider in China. Such are the topic of Massimo Florio’s book, Investing in Science: Social Cost-Benefit Analysis of Research Infrastructures.  In it, he demonstrates that benefit-cost analysis (BCA) can be useful in answering the question:  Are these costly research infrastructures worth it?  He draws upon his substantial experience to adapt the traditional framework to the specific characteristics of research infrastructure (RI).  He identifies elements common to RIs, describes how they can be measured and valued, and gives examples from work that he and others have done. This pioneering book fills a gap in that such large-scale investments in science only infrequently have been evaluated using BCA.

January 29, 2020

By: David L. Weimer

Sometimes conferences actually do stimulate research that otherwise might not be done. Six years ago, I was enjoying a breakfast conversation at the SBCA annual research conference with our immediate past president, Clark Nardinelli. At that time, he was overseeing the Regulatory Impact Analysis (RIA) of Federal Drug Administration (FDA) rules implementing the Food Safety Modernization Act, which included provisions to reduce the risks posed to people and pets from adulterated pet food. He complained that, unlike the case of human mortality risks, he had no sound basis for monetizing changes in mortality risks for dogs and other pets. As dogs do not freely make tradeoffs between risks and wages in labor markets, I suggested that finding a value of statistical dog life would likely require a contingent valuation study. Would his unit provide the approximately $50 thousand dollars needed to do the contingent valuation survey? Unfortunately, he had nothing but praise for the suggestion.

January 8, 2020

By: Fran Sussman

So, you've done this great research, had this novel idea, attended a phenomenal event, or read a paradigm-shifting book, and you want to enlighten everyone in the benefit-cost analysis community. Yes, we absolutely want your blog at the Society for Benefit-Cost Analysis.

December 11, 2019

By: Deborah Aiken

This post describes a new article forthcoming in the Journal of Benefic Cost Analysis, “When Benefit-Cost Analysis Becomes Optional: Regulatory Analysis at the Consumer Product Safety Commission in the CPSIA Era.” The article describes a familiar scenario for practitioners of regulatory benefit cost analysis: a high impact event followed by swift and forceful congressional action. In the Consumer Product Safety Commission (CPSC) case, the high impact event was a series of product recalls involving toys contaminated with lead. Congress’s response was to pass the Consumer Product Safety Improvement Act (CPSIA) and require several rulemakings.

November 20, 2019

By: Scott Farrow and Detlof von Winterfeldt

Applying benefit-cost analysis to homeland security regulations and related applications is difficult, in part due to issues in measuring security or risk avoided (Roberts, 2019; Farrow and Shapiro, 2009). The Office of University Programs within the Department of Homeland Security (DHS) asked our team of benefit-cost, decision, and risk analysts to evaluate changes in their security practices based on DHS funded research and development (R&D) projects over the last 15 years. Initial results have been published in von Winterfeldt, et al. (2019) with additional submissions planned for peer reviewed journals. 

October 9, 2019

By: Daniel R. Pérez

Policymakers are called to act in the present to protect the public against future risks while operating under the constraints of doing so in an economically efficient yet effective manner. Unfortunately, these risks tend to present the most difficulty for traditional analytical tools in support of policymaking. This post describes a recently published article, “Dynamic Benefit-Cost Analysis for Uncertain Futures,” co-authored with Susan E. Dudley, Brian F. Mannix, and Christopher Carrigan as part of the open access Symposium on Analysis for Uncertain Futures in the Journal of Benefit Cost Analysis. The article explores the challenges “uncertain futures” pose for analytical tools to satisfactorily support policymaking and proposes the use of “dynamic benefit-cost analysis” frameworks as a necessary approach to address these challenges.

 September 13, 2019

By: Bengt Kristrom

Professor Martin Weitzman passed away unexpectedly at the end of August 2019. A substantial number of accounts of his many contributions to economics in general and environmental economics in particular are available, and collectively provide a good overview of his contributions and influence on the profession (see links at the end of this post). In this short note, I want to highlight some aspects of his works that are relevant for applied welfare economics in general and cost-benefit analysis in particular. I single out two stellar contributions that opened up new vistas for research and enriched the literature on welfare measurement.

September 11, 2019

By: Jorge Luis Garcia & Grace Guthrie Griffith

The National Center for Children in Poverty reports that 21% of American children are living in poverty, including 46% of African American and 40% of Latino children. Compared to non-poor children, on average impoverished children are 15.6% less likely to graduate high school and 37% more likely to be unemployed as adults.

August 28, 2019

By: Clark Nardinelli

Over four decades ago I struggled through my first year of graduate school in economics, a struggle made palatable by the extraordinary professor who taught my first economics course. Deirdre McCloskey was (and is) smart, fun, and eccentric, and she enthusiastically led us through our first pass at economics. Part of that passage included learning to write, for McCloskey held – a notion considered eccentric – that economists should write well. Although good writing remains suspect among economists, Deirdre McCloskey taught me long ago that good writing makes for good economics.

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