A Comment on the Conference on Cost-Benefit Analysis

Abstract

This comment discusses the importance of politics in understanding cost-benefit analysis. Economists frequently rely on a social planner model, under which cost-benefit analysis has a straightforward role. However, a better model for understanding actual political choices of policies and programs is the interest group competition model. In this model, cost-benefit analysis can be used to explain why some regulations and other policies are adopted and others are not. Further, cost-benefit analysis may also be useful for undermining misleading claims of self-interested political pressure groups.