scholarly journals The Politics of Cost-Benefit Analysis

2019 ◽  
Author(s):  
Niek Mouter
Keyword(s):  
Decision Making ◽  
Cost Benefit Analysis ◽  
Belief Systems ◽  
Cost Benefit ◽  
Sensitivity Analyses ◽  
Statistical Relation ◽  
Benefit Analysis ◽  
Value Judgments ◽  
The Social ◽  
Political Decisions

Cost-benefit analysis (CBA) is a widely used economic appraisal method that aims to support politicians in making decisions about projects and policies. Several researchers have tried to uncover the extent to which CBA actually impacts decision-making by investigating the statistical relation between the results of CBA studies and political decisions. Although these studies show that there is no significant statistical relation between the outcomes of CBA studies and political decisions, there is clear evidence that the institutionalization of CBA affects the planning and decision-making process within the bureaucracy. Civil servants, for instance, use CBAs to government projects in the early phases of the planning process. The literature identifies various barriers that hamper politicians’ use of CBA when forming their opinion. First, politicians often receive results of CBA studies too late in the process. When politicians receive a CBA after they already made up their mind and communicated their viewpoint, the chance is low that the results of the CBA will (substantially) influence their decision. A second important barrier that limits the use of CBA by politicians is that they do not have enough trust in CBA’s impartiality. A third barrier is that politicians contest value judgments implicit in CBA. The literature distinguishes six ideological value judgments that inevitably need to be made when conducting a CBA: (a) Which individuals have standing in a CBA? (b) Which preferences have standing in a CBA? (c) Which procedure is used to value impacts? (d) On which dimensions are standard numbers differentiated? (e) Which weight is assigned to preferences of individuals in the social welfare function? (f) Which approach is adopted to select the social discount rate? The implication of the fact that CBA analysts cannot escape from making value judgments when conducing the study is that CBA is currently a problematic tool for democratic decision-making because, when applied in practice, the analysis is based on a specific set of politically loaded premises that fosters (damages) the interests of politicians (not) endorsing these premises. It is possible to overcome this problem through informing politicians about the extent to which switching value judgements leads to different CBA outcomes. The introduction of so-called normative sensitivity analyses safeguards that politicians with different belief systems are equally equipped to use the results of a CBA to arrive at a well-founded evaluation of a government project.

scholarly journals Financial evaluation of competitive ability of fruit growing in Bosnia and Herzegovina

2004 ◽  
Vol 44 (161) ◽  
pp. 193-203 ◽  
Author(s):  
Ferhat Cejvanovic ◽  
Crtomir Rozman
Keyword(s):  
Decision Making ◽  
Agricultural Production ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Economic Indicators ◽  
Benefit Analysis ◽  
Social Community ◽  
The Social ◽  
Fruit Growing ◽  
The Cost

Before making a decision to invest in fruit growing, an investor needs to have the basic information on which to base his decision. This information contains sufficient economic indicators to form the basis for the decision making. The decision should be based, first of all, on economic profitability of the investment. Cost-benefit analysis is a method which provides the decision maker with the information about a number of economic indicators regarding the desired investment, from its profitability and competitiveness to the return on investment period, etc. This paper deals with the cost-benefit analysis in the decision-making process concerning economic profitability of investing in agricultural production, namely the newly planted fruit. Cost-benefit analysis has many advantages compared with the other known methods. It has proved very useful in agricultural production since it makes it possible to estimate the profitability of investment in very specific conditions of agricultural production, taking into account numerous factors of its economic efficiency as well as the main effects that may be expected both by individual producers and the social community as a whole.

scholarly journals FEATURES OF MODERN STAGES OF ANALYSIS OF BENEFITS AND COSTS

2021 ◽  
Author(s):  
Tetyana Kibuk
Keyword(s):  
Decision Making ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Present Value ◽  
Public Project ◽  
The Public ◽  
The Social ◽  
The Cost ◽  
Benefits And Costs

The article is devoted to the study of one of the most relevant and widely used tools of the modern decision-making process at the national and international levels – cost-benefit analysis (CBA). The article defines the purpose of the cost-benefit analysis. Three approaches to the selection of CBA stages are analyzed, among which there are three, from five to seven and ten stages. Their advantages and disadvantages are highlighted. The modern stages of the analysis of benefits and costs are systematized, namely: determining the level of analysis and its purpose; identification of alternatives to the public project; identification of the list of benefits and costs of the project; valuation in monetary terms of certain benefits and costs; establishing project evaluation criteria; discounting benefits and costs to obtain the present value of the project; determination of the net present value of social project options; analysis of the sensitivity of the social project; analysis of the distribution of existing benefits from the public project and selection one project among several alternative ones for implementation. The figures of the choice of existing alternatives of the public project are analyzed. Existing types of project costs are identified, including direct, indirect, tangible, intangible, opportunity and real costs. The list of benefits investigated by the analysis is determined, which include: monetary, non-monetary and intangible benefits. The difference between monetary valuation of project benefits and costs at shadow and market prices is investigated. The most common selection criteria in the modern project decision-making process are analyzed. The peculiarities of the formation of the social discount rate are highlighted. The features of sensitivity analysis and the purpose for its implementation are determined. Existing types of uncertainty and ways to overcome them are summarized, namely knowledge uncertainty, policy uncertainty and future uncertainty. The specifics of decision making in the cost-benefit analysis are studied. Further directions of research of problematic questions of the cost-benefit analysis in modern economy are identified.

scholarly journals A Methodological Framework for Sustainable Office Building Renovation Using Green Building Rating Systems and Cost-Benefit Analysis

2020 ◽  
Vol 12 (15) ◽  
pp. 6156
Author(s):  
Nataša Šuman ◽  
Mojca Marinič ◽  
Milan Kuhta
Keyword(s):  
Decision Making ◽  
Sustainable Development ◽  
Cost Benefit Analysis ◽  
Early Stage ◽  
Cost Benefit ◽  
Green Building ◽  
Office Buildings ◽  
Office Building ◽  
Rating System ◽  
Benefit Analysis

Sustainable development is a priority for the future of our society. Sustainable development is of particular importance to the Architecture, Engineering, and Construction (AEC) industry, both for new buildings and for the renovation of existing buildings. Great potential for sustainable development lies in the renovation of existing office buildings. This paper introduces a new framework for identifying the best set of renovation strategies for existing office buildings. The framework applies selected green building rating system criteria and cost-effective sustainable renovation solutions based on cost-benefit analysis (CBA), and thus provides a novelty in decision-making support for the sustainable renovation of office buildings at an early-stage. The framework covers all necessary steps and activities including data collection, determination of the required level of renovation, selection of the green building rating system, identification of impact categories and criteria, and final evaluation and decision-making using CBA. The framework can be used in conjunction with different systems and according to different regional characteristics. The applicability of the addressing procedure is shown through a case study of a comprehensive renovation of an office building in the city of Maribor.

STAKEHOLDERS, SPATIAL LOCATIONS AND TIME HORIZONS IN AN EXTENDED SOCIAL COST-BENEFIT ANALYSIS: A CASE OF PIPALPANKHA WATER RESOURCE PROJECT

2009 ◽  
Vol 11 (02) ◽  
pp. 245-265 ◽  
Author(s):  
P. RAM BABU ◽  
NALLATHIGA RAMAKRISHNA
Keyword(s):  
Decision Making ◽  
Water Resource ◽  
Social Cost ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Development Project ◽  
Development Projects ◽  
Benefit Analysis ◽  
Time Horizons ◽  
Spatial Locations

Cost-Benefit Analysis (CBA) has been serving as an important tool for decision making with regard to the development projects involving large investments. The Social Cost-Benefit Analysis (SCBA) is an extension of the CBA to certain social impacts, which hitherto were not measured. As the impacts of development projects on ecology and environment assumed importance, measuring the corresponding costs and benefits also began to assume significance. With the advancement in economic valuation techniques over time, measurement could be done and the framework of SCBA has been extended to incorporate the same. Moreover, unlike the CBAs, which do not account for the distributional aspects, the SCBA can potentially account for these. This paper presents a case study of extending the SCBA framework to include social and environmental impacts of a large water resource development project in India. It emphasises the distribution of project benefits and costs over stakeholders, spatial locations and time horizons so as to demonstrate the utility of extended SCBA in project decision making. It is observed that both the numeraire measure i.e. cost-benefit ratio, as well as the distributional analysis present a favourable case for the project.

The social valuation of income: a survey approach

2014 ◽  
Vol 41 (6) ◽  
pp. 808-820 ◽  
Author(s):  
David John Evans ◽  
Erhun Kula ◽  
Yoko Nagase
Keyword(s):  
Political Parties ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Statistical Testing ◽  
Survey Method ◽  
Benefit Analysis ◽  
Content Type ◽  
The Social ◽  
Social Valuation ◽  
Survey Approach

Purpose – The purpose of this paper is to estimate survey-based values of the elasticity of marginal social valuation of income, an important welfare parameter in cost-benefit analysis. Design/methodology/approach – A model relating equity welfare weights to income is developed, and iso-elasticity of marginal valuation of income is tested using survey data obtained from a sample of Turkish politicians who are instrumental in policy making. Findings – Based on the survey feedback, formal statistical testing indicates that Turkish politicians, regardless of party allegiance, reveal preferences consistent with an iso-elastic marginal social valuation of income. The estimated value of the elasticity measure is close to unity for each of the political parties. Originality/value – The originality of the paper is in terms of the survey method used to obtain from Turkish politicians estimates of the marginal social valuation of income. This welfare parameter is needed in the calculation of both social discount rates and welfare weights. The paper will be of interest to academics in the field of welfare economics as well as to practitioners involved in the appraisal of social projects and policies.

Inclusion of Social Subsystem Issues in IT Investment Decisions

2011 ◽  
pp. 164-183
Author(s):  
Sherry D. Ryan ◽  
Michael S. Gates
Keyword(s):  
Survey Data ◽  
Decision Process ◽  
Cost Benefit Analysis ◽  
Investment Decisions ◽  
Cost Benefit ◽  
Decision Makers ◽  
Benefit Analysis ◽  
Analysis Model ◽  
Decision Criteria ◽  
The Social

Researchers have attempted to augment the traditional cost/benefit analysis model used in the IT decision process. However, frequently social subsystem issues are inadequately considered. Survey data, collected from a U.S. sample of 200 executives, provides an empirical assessment of how these issues compare with other IT decision criteria given differing decision types. The social subsystem issues considered most important by decision makers are also identified and the manner by which they consider these issues is investigated.

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