Economics Dictionary of ArgumentsHome
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| Cost-benefit analysis: Cost-benefit analysis is a systematic approach to estimating the strengths and weaknesses of alternatives used to determine options that provide the best approach to achieving benefits while preserving savings. It involves comparing the total expected cost of each option against the total expected benefits, to see whether the benefits outweigh the costs, and by how much._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Richard O. Zerbe on Cost-Benefit Analysis - Dictionary of Arguments
Parisi I 357 Cost-benefit analysis/Zerbe: Gains or benefits are measured against costs to determine whether or not a project is worthwhile for those given economic standing. The need to determine standing arises as no benefit–cost analysis can include all values. In practice, a BCA does not include everyone affected by a policy alternative. Most analyses are done in a particular context that determines standing. For instance, a municipality might only consider effects on municipal revenues or limit effects to those within its borders. The state government might not consider effects of its pollution policy on neighboring states and the federal government might not consider effects on foreign countries. Many projects will have only minor effects on certain groups and it may be considered too expensive to include these effects. The standing decision will be affected by the choice between a partial equilibrium analysis and a general equilibrium analysis. When the number of markets included in the BCA is highly restricted, the analysis is called a “partial equilibrium” analysis; when the number of markets included is large, it is called a “general equilibrium” analysis. A small town that conducts a BCA to determine whether to purchase a garbage truck or continue to outsource garbage collection would use a partial equilibrium analysis. On the other hand, a national oil tax will affect many markets: transportation markets, plastic goods and other petroleum product markets, labor markets, and so forth. When the effects in several markets are taken into account, the analysis is said to be a general equilibrium analysis. An analysis of a national oil tax should be done from a general equilibrium perspective in which these major markets and their interactions are considered. >Equilibrium, >Cost-benefit analysis/Hicks, >Willingness to pay/Tversky/Kahneman Richard O. Zerbe. “Cost-Benefit Analysis in Legal Decision-making.” In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Zerbe, Richard O. Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
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