Leading Entrepreneurship

In my fourth post of this series, Cost Benefit Analysis Justification, we looked at reasons why one might use to justify using this analysis, we’ll look at the other side in this post.

“…the first objection against the common use of CBA as a normative standard applying to agency decisions is that it fails adequately to respect the decisions of democratic legislatures… negotiation directed at freshly working out compromises among competing interests and commitments is still importantly relevant to elaborating the content of the popular will.”

Henry S. Richardson (2000)
The Stupidity of the Cost-Benefit Standard,
Journal of Legal Studies. XXIX,
Number 2, Part 2, 971-1004.

“…the cost-benefit analysis controversy has been about the use of an umbrella policy instrument to supervise all regulations.”

Matthew D. Adler and Eric A. Posner (2000)
Introduction
Journal of Legal Studies. XXIX,
Number 2, Part 2, 1105-1148.

“More generally, critics object to the cost-benefit framework’s use of a monetary metric to place the pros and cons of an action on a common footing. They complain, for example, that when a power plant pollutes the air, our gains from the cheap power thus obtained simply cannot be compared with the pristine view of the Grand Canyon we sacrifice.”

Robert H. Frank (2000)
Why is Cost-Benefit Analysis So Controversial?
Journal of Legal Studies. XXIX,
Number 2, Part 2, 913-930.

“When the question is whether to allow one person to hurt another, or to destroy a natural resource; when a life or a landscape cannot be replaced; when harms stretch out over decades or even generations; when outcomes are uncertain; when risks are shared or resources are used in common; when the people ‘buying’ harms have no relationship with the people actually harmed – then we are in the realm of priceless, where market values tell us little about the social values at stake.”

Frank Ackerman & Lisa Heinzerling (2004)
Priceless: On Knowing the Price
of Everything and the Value of Nothing.
New York, NY: The New Press.

“Opposition to cost-benefit analysis may also stem from the fact that the costs of a policy change are often far easier to quantify than its benefits, especially in the domains of environmental policy and health and safety policy.”

Robert H. Frank (2000)
Why is Cost-Benefit Analysis So Controversial?
Journal of Legal Studies. XXIX,
Number 2, Part 2, 913-930.

“But this analysis has a flaw that can easily prove fatal: Costs and benefits must be quantified in the same currency. While this is easy when considering revenue-generating investments – money-in versus money-out – in the security world this is had because, although money goes in, what comes back is hard to express in dollars.”

Daniel E. Geer, Jr (2001)
Making Choices to Show ROI,
Secure Business Quarterly,
Volume 1, Issue 2, Quarter 4

“Textbook CBA does not recognize the existence of adaptive preferences… people may adapt to an unjust or otherwise unfavorable environment, so that their [cost] for eliminating a risk or irritant is less than what it would be if they did not adapt.”

Matthew D. Adler and Eric A. Posner (2000)
Implementing Cost-Benefit Analysis When Preferences Are Distorted,
Journal of Legal Studies. XXIX,
Number 2, Part 2, 1105-1148.

“…people implicitly accept risks…”

Dennis A. Gioia, (1992)
Pinto Fires and Personal Ethics:
A Script Analysis of Missed Opportunities,
Journal of Business Ethics,
11, 5, 6, 379-389.

“…because unwillingness to pay is based on income, cost-benefit analysis assigns unjustifiably large decision weight to high-income persons.”

Robert H. Frank (2000)
Why is Cost-Benefit Analysis So Controversial?
Journal of Legal Studies. XXIX,
Number 2, Part 2, 913-930.