Critique of Cost-Benefit Analysis, and Alternative Approaches to Decision-Making

Once upon a time, protection of human health and the natural environment did not seem to require economic analysis. Before the 1980s, public health and environmental policies were debated primarily on scientific, ethical, and legal grounds, with less emphasis on costs – let alone monetized benefits. More recently, it has become the norm to assume the need for cost-benefit analysis of new policies, comparing monetary costs and estimates of the monetary value of benefits. Just as a business should only make an investment if the expected revenues exceed the costs, the new approach suggests that government should only adopt a new initiative if its expected benefits exceed its costs.