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Cost Benefit Analysis And Its Uses

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CBA and Injustice, section 10.5. The use of cost benefit analysis as a tool to determine public policy has many shortcomings we would prefer to avoid. The topic of this section is the lack of justice inherent to CBA and comparing it to other types of measuring systems.
The Pareto Criterion is based on the idea that a policy is acceptable if it benefits at least one person and harms no person. That is a nice idea but is far too strict to be useful in the real world. The article gives examples of just how impractical this criterion would be for us to use in any field. Any policy that would help millions but would somehow harm just one person is not justifiable using the Pareto Criterion.
The next guideline to be discussed is that of the Kaldor-Hicks principle. Using Kaldor-Hicks a policy is justified if the overall effect if a net gain. So if I gain three dollars and you loose one dollar the policy would net us one dollar. In theory those who gain could repay those whom loose and still have some left over. Important in this theory is that it is possible for the gainers to repay the losers, not that it is required. The problem with this theory is that a single person may gain a great amount and many others may loose a great amount as long as the result is a net gain.
CBA looks at the costs involved in the policy to determine if it is justifiable. This creates difficulties when we realize it creates a one vote per dollar scenario. This does not follow the ideas of democracy we seem to want to follow. When it becomes possible for people to buy the CBA justice cannot follow.
Unreliability: Shadow Prices and Discount Rates, 10.6. Another huge problem with CBA is the prices used in the study. It is very possible to accidentally, or intentionally, use fudged numbers, which drastically change the outcome of the CBA.
Prices may be excluded from the analysis, which were not anticipated or were purposely omitted due to biases of the people doing the analysis. The articles gave several examples, most were not needed but did show how drastic ...

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Keywords: cost benefit analysis and its purpose, explain cost benefit analysis and its purpose, cost-benefit analysis and its use in the project management, cost benefit analysis uses, define the cost benefit analysis, what is a cost benefit analysis and why is it important

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