Implementing the SWF Framework

2019 ◽  
pp. 161-202
Author(s):  
Matthew D. Adler
Keyword(s):  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Important Application ◽  
Policy Choice ◽  
Risk Regulation ◽  
Optimal Tax ◽  
Major Application ◽  
Policy Cost ◽  
The U.S

The SWF framework is a fully generic methodology for policy assessment. One important application in the economic literature concerns taxation (termed “optimal tax” scholarship); but the framework is applicable to any type of governmental policy choice. This chapter illustrates the implementation of the SWF framework, using the regulation of fatality risks as a case study. Risk regulation is chosen because this is the major application of cost-benefit analysis (CBA) in the U.S. government. The chapter focuses on the utilitarian and continuous-prioritarian SWFs. Utilitarianism gives priority to the young in reducing fatality risks and to those with higher income. Continuous prioritarianism intensifies the preference for the young, but mitigates or reverse the preference for those with higher income. CBA is significantly different from both utilitarianism and continuous prioritarianism. It markedly intensifies the utilitarian preference for reducing the risks of those with higher incomes; and, unlike both SWF-based approaches, is insensitive to the distribution of policy cost.

Measuring Social Welfare

2019 ◽  
Author(s):  
Matthew D. Adler
Keyword(s):  
Social Welfare ◽  
Cost Benefit Analysis ◽  
Probability Distributions ◽  
Cost Benefit ◽  
Well Being ◽  
Risk Regulation ◽  
The Social ◽  
Policy Impacts ◽  
The Difference

The social welfare function (SWF) framework is a powerful tool for evaluating governmental policies in light of human well-being. The framework originates in theoretical welfare economics and is widely used in contemporary economic scholarship, although not (yet) in governmental practice. This book is intended to provide an accessible, yet reasonably rigorous overview of the SWF approach. The framework has three components: an interpersonally comparable measure of well-being, which functions to translate outcomes into lists (“vectors”) of well-being numbers, one for each person in the population; a rule (the SWF) for ranking well-being vectors, such as the utilitarian SWF (which simply adds up well-being numbers), a continuous-prioritarian SWF (which gives greater weight to the worse off), or some other; and a procedure for ranking policies, understood as probability distributions across outcomes. Each component of the SWF framework is reviewed in detail; in doing so, the book engages both the economic literature on SWFs and philosophical scholarship regarding individual well-being, ethics, and distributive justice. The book also clarifies the difference between the SWF approach and cost-benefit analysis (CBA), which uses money rather than an interpersonally well-being measure as the scale for quantifying policy impacts. The book includes a detailed case study of risk regulation—illustrating how the SWF framework can be used in practice and how it contrasts with CBA. The book is written to be accessible to readers without much mathematical training, but is backed up by an extensive mathematical appendix.

scholarly journals The ALARP Principle in the Cost-Benefit Analysis for the Acceptability of Investment Risk

2018 ◽  
Vol 10 (12) ◽  
pp. 4668 ◽  
Author(s):  
Antonio Nesticò ◽  
Shuquan He ◽  
Gianluigi De Mare ◽  
Renato Benintendi ◽  
Gabriella Maselli
Keyword(s):  
Cost Benefit Analysis ◽  
Risk Mitigation ◽  
Cost Benefit ◽  
Economic Evaluations ◽  
Investment Risk ◽  
Benefit Analysis ◽  
Mitigation Design ◽  
The Cost

The process of allocating financial resources is extremely complex—both because the selection of investments depends on multiple, and interrelated, variables, and constraints that limit the eligibility domain of the solutions, and because the feasibility of projects is influenced by risk factors. In this sense, it is essential to develop economic evaluations on a probabilistic basis. Nevertheless, for the civil engineering sector, the literature emphasizes the centrality of risk management, in order to establish interventions for risk mitigation. On the other hand, few methodologies are available to systematically compare ante and post mitigation design risk, along with the verification of the economic convenience of these actions. The aim of the paper is to demonstrate how these limits can be at least partially overcome by integrating, in the traditional Cost-Benefit Analysis schemes, the As Low as Reasonably Practicable (ALARP) logic. According to it, the risk is tolerable only if it is impossible to reduce it further or if the costs to mitigate it are disproportionate to the benefits obtainable. The research outlines the phases of an innovative protocol for managing investment risks. On the basis of a case study dealing with a project for the recovery and transformation of an ancient medieval village into a widespread-hotel, the novelty of the model consists of the characterization of acceptability and tolerability thresholds of the investment risk, as well as its ability to guarantee the triangular balance between risks, costs and benefits deriving from mitigation options.

Allocation of Environmental Remediation Funds Using Economic Risk-Cost-Benefit Analysis: A Case Study

1996 ◽  
Vol 16 (4) ◽  
pp. 95-105 ◽  
Author(s):  
Bruce R. James ◽  
Dale D. Huff ◽  
John R. Trabalka ◽  
Richard H. Ketelle ◽  
Craig T. Rightmire
Keyword(s):  
Environmental Remediation ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Economic Risk ◽  
Risk Cost
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