Rethinking Cost Benefit Analysis.pdf - University of Chicago Law School Chicago Unbound Journal Articles Faculty Scholarship 1999 Rethinking

Rethinking Cost Benefit Analysis.pdf - University of...

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University of Chicago Law SchoolChicago UnboundJournal ArticlesFaculty Scholarship1999Rethinking Cost-Benefit AnalysisEric A. PosnerMatthew D. AdlerFollow this and additional works at:Part of theLaw CommonsThis Article is brought to you for free and open access by the Faculty Scholarship at Chicago Unbound. It has been accepted for inclusion in JournalArticles by an authorized administrator of Chicago Unbound. For more information, please contact[email protected].Recommended CitationEric Posner & Matthew D. Adler, "Rethinking Cost-Benefit Analysis," 109 Yale Law Journal 165 (1999).
ArticlesRethinking Cost-Benefit AnalysisMatthew D. Adlert and Eric A. Posner"tCONTENTS1. INTRODUCTION .................................................................................167II. BACKGROUND ..................................................................................169III. THE CONVENTIONAL VIEW OF COST-BENEFIT ANALYSIS ...............176A .W hat Is CBA ? ..........................................................................1771. Measuring Individual Utility Changes ............................1772. A ggregation .....................................................................181B. The Conventional Defenses of CBA .........................................1871. The Pareto Defense .........................................................1882. The Kaldor-Hicks Defense ..............................................1903. The (Unrestricted) Utilitarian Defense ...........................191IV. RECONCEPTUALIZING COST-BENEFIT ANALYSIS ............................194A. Well-Being: Desire, Pleasure, and Objective Value ...............197B. The Possibility of Interpersonal Welfare Comparisons ...........204C. The Moral Relevance of Overall Well-Being ..........................209D. Decision Procedures and Moral Criteria ................................216V. COST-BENEFrr ANALYSIS AND OTHER DECISION PROCEDURES:A COMPARATIVE, WELFARIST ASSESSMENT ...................................225Assistant Professor of Law, University of Pennsylvania.i Professor of Law, University of Chicago. Thanks to Larry Alexander. Steve Coate. DavidDriesen, Jeff Gordon, Alon Harel, Saul Levmore, Yew-vKwang Ng. Arti Rai. Cass Sunstein, DavidWeisbach, and participants in workshops at the University of Pennsylvania Law School. theUniversity of Illinois College of Law, and the University of Chicago. for helpful comments.HeinOnline -- 109 Yale L.J. 165 1999-2000
166 The Yale Law Journal [Vol. 109: 165A. CBA and Its Procedural Competitors: Costs and Benefits ......2261. D irect Implementation ....................................................2262. Multidimensional Versus Unidimensional andNonaggregative Procedures ............................................2293. Comparing Multidimensional Procedures: CBA,Direct Multidimensional Assessment, and Q UAL Ys .......233B. When Should Agencies Use CBA ? A TentativeRecom m endation .....................................................................238VI. NONWELFARIST CONSIDERATIONS ..................................................243V II. C ONCLUSION ....................................................................................245HeinOnline -- 109 Yale L.J. 166 1999-2000
Cost-Benefit AnalysisI. INTRODUCTIONThe reputation of cost-benefit analysis (CBA) among Americanacademics has never been as poor as it is today, while its popularity amongagencies in the United States government has never been greater. Many lawprofessors, economists, and philosophers believe that CBA does notproduce morally relevant information and should not be used in projectevaluation. A few commentators argue that the information produced byCBA has some, but limited, relevance. Defenders of CBA form anincreasingly beleaguered minority, consisting mostly of applied economistswho feel compelled to respond to attacks on the methodologicalunderpinnings of their work. Modem textbooks on CBA are plentiful, andsome of them are optimistic about the usefulness of the procedure, but mostof

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