scholarly journals Efficiency without Apology: Consideration of the Marginal Excess Tax Burden and Distributional Impacts in Benefit–Cost Analysis

2020 ◽  
Vol 11 (3) ◽  
pp. 457-478
Author(s):  
Anthony E. Boardman ◽  
David H. Greenberg ◽  
Aidan R. Vining ◽  
David L. Weimer
Keyword(s):  
Cost Analysis ◽  
Recent Article ◽  
Allocative Efficiency ◽  
Tax Burden ◽  
Distributional Effects ◽  
Benefit Cost Analysis ◽  
Benefit Cost ◽  
Distributional Impacts

AbstractSome issues in the application of benefit–cost analysis (BCA) remain contentious. Although a strong conceptual case can be made for taking account of the marginal excess tax burden (METB) in conducting BCAs, it is usually excluded. Although a strong conceptual case can be made that BCA should not include distributional values, some analysts continue to advocate doing so. We discuss the cases for inclusion of the METB and the exclusion of distributional weights from what we refer to as “core” BCA, which we argue should be preserved as a protocol for assessing allocative efficiency. These issues are topical because a recent article in this journal recommends ignoring the METB on the grounds that desirable distributional effects offset its cost. We challenge the logic of this article and explain why it may encourage inefficient policies.

Benefit-Cost Analysis for Financial Regulation

2013 ◽  
Vol 103 (3) ◽  
pp. 393-397 ◽  
Author(s):  
Eric Posner ◽  
E. Glen Weyl
Keyword(s):  
Cost Analysis ◽  
Financial Markets ◽  
Financial Regulation ◽  
Allocative Efficiency ◽  
Social Value ◽  
Wall Street ◽  
Benefit Cost Analysis ◽  
The Social ◽  
Benefit Cost ◽  
Rule Making

Calls for benefit-cost analysis in rule-making, based on the Dodd-Frank Wall Street Reform Act, have revealed a paucity of work on allocative efficiency in financial markets. We propose three principles to help fill this gap. First, we highlight the need for quantifying the statistical cost of a crisis to trade off the risk of a crisis against loss of growth during good times. Second, we propose a framework quantifying the social value of price discovery, and highlighting which arbitrages are over- and under-supplied from a social perspective. Finally, we distinguish between insurance benefits and gambling-facilitation harms of market completion.

scholarly journals Benefit-Cost Analysis: Distributional Considerations under Producer Quota Buyouts

2010 ◽  
Vol 1 (1) ◽  
pp. 1-15 ◽  
Author(s):  
Andrew Schmitz ◽  
Troy G. Schmitz
Keyword(s):  
Cost Analysis ◽  
Distributional Effects ◽  
Empirical Application ◽  
Benefit Cost Analysis ◽  
Consumer Benefits ◽  
The Government ◽  
Program Change ◽  
Benefit Cost ◽  
Theory Of Production ◽  
The U.S

AbstractBenefit-cost (B/C) analysis must take into account the distributional effects from a policy or program change. To highlight this, we focus on the theory of production quota buyouts within a B/C framework. As an empirical application, we provide evidence on the distributional effects of the U.S. government buyout of the peanut program in 2002, where production quotas were key ingredients. Two approaches to producer compensation under the buyout are discussed: (1) value of quota approach and (2) gains from quota approach. In the peanut quota program buyout, the U.S. government chose the value of quota approach. Both consumers and producers were made better off as a result of the buyout, and there was a net gain in efficiency. If the government had chosen the gains from quota approach instead, government expenditures and producer gains would have been lower, and consumer benefits would have remained unchanged. Under either approach, the B/C ratios calculated for the government quota buyout are almost identical.

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