Hammitt, James K.
(2021)
Accounting for the Distribution of Benefits and Costs in Benefit–Cost Analysis.
Journal of Benefit-Cost Analysis, vol.12 (n°1).
64 - 84.
This is the latest version of this item.
Abstract
Benefit–cost analysis (BCA) is often viewed as measuring the efficiency of a policy independent of the distribution of its consequences. The role of distributional effects on policy choice is disputed; either: (a) the policy that maximizes net benefits should be selected and distributional concerns should be addressed through other measures, such as tax and transfer programs or (b) BCA should be supplemented with distributional analysis and decision-makers should weigh efficiency and distribution in policy choice. The separation of efficiency and distribution is misleading. The measure of efficiency depends on the numéraire chosen for the analysis, whether monetary values or some other good (unless individuals have the same rates of substitution between them). The choice of numéraire is not neutral; it can affect the ranking of policies by calculated net benefits. Alternative evaluation methods, such as BCA using a different numéraire, weighted BCA, or a social welfare function (SWF), may better integrate concerns about distribution and efficiency. The most appropriate numéraire, distributional weights, or SWFs cannot be measured or statistically estimated; it is a normative choice.
Item Type: | Article |
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Language: | English |
Date: | April 2021 |
Refereed: | Yes |
Place of Publication: | Cambridge |
JEL Classification: | A13 - Relation of Economics to Social Values D30 - General D61 - Allocative Efficiency; Cost-Benefit Analysis D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement H40 - General I31 - General Welfare; Basic Needs; Living Standards; Quality of Life; Happiness |
Subjects: | B- ECONOMIE ET FINANCE |
Divisions: | TSE-R (Toulouse) |
Site: | UT1 |
Date Deposited: | 18 Jan 2022 11:50 |
Last Modified: | 09 Mar 2022 15:41 |
OAI Identifier: | oai:tse-fr.eu:126411 |
URI: | https://publications.ut-capitole.fr/id/eprint/44189 |
Available Versions of this Item
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Accounting for the distribution of benefits & costs in benefit-cost analysis. (deposited 23 Jun 2020 09:44)
- Accounting for the Distribution of Benefits and Costs in Benefit–Cost Analysis. (deposited 18 Jan 2022 11:50) [Currently Displayed]