This article discusses the difference between benefit–cost analysis (BCA) and social welfare analysis in the evaluation of pandemic preparedness policies. Two social welfare approaches are considered: utilitarianism and prioritarianism. BCA sums the individuals’ monetary equivalents of the pandemic impacts. Social welfare analysis aggregates individuals’ well-being impacts. The aggregation rule identifies the normative judgments about what is fair. This article shows that the two methods yield very different estimates of the value of avoiding a future pandemic similar to the COVID-19 one. Compared to BCA, considerations about the distribution of the costs of the hypothetical intervention play a major role in the estimate of both utilitarian and prioritarian pandemic burdens: The more progressive the distribution of the costs is, the larger the net benefits of preventing the pandemic. In contrast, the BCA pandemic burden is indifferent to the distribution of the intervention costs. In addition, BCA tends to underestimate the burden suffered by low-income countries compared to social welfare analysis.

Fertility control strategies became widespread in rural Spain through the twentieth century: a significant number of parents decided to reduce their marital fertility once the advantages of control strategies became widely known. This paper explores the impact of those practices on children through a comparative study of the heights and occupations of grandparents, parents, and children. We analyze more than 1,200 individuals from three different generations born between 1835 and 1959 in 14 rural Spanish villages, studying whether the advantages associated with fertility control were maintained over time favoring a better family status or whether they were diluted in the next generation. The largest increases in height were among children whose parents controlled their fertility by stopping having children before the mother's 36th birthday. However, it does not seem that this increase in biological well-being was accompanied by major episodes of upward social mobility.

As its practitioners know well, benefit-cost analysis (BCA) walks a fine line between the positive and normative, between the science of economics and the art of political economy. Missteps threaten to undermine its credibility as a value-free science, while overcaution risks irrelevance to the pressing questions of the day. As BCA adapts to give more weight to distributional concerns, while operating in a more highly charged political environment than ever before, these tensions will only grow. For perspective, I reexamine three prominent episodes in the history of economics where these issues were vigorously debated: (i) The founding of the NBER by Wesley Clair Mitchell, who insisted that the organization eschew all policy recommendations; (ii) the introduction of the modern definition of economics as the study of tradeoffs by Lionel Robbins, who insisted welfare effects could never be aggregated; and (iii) the origins of BCA as a measure of income, which to first-generation practitioners seemed to foreclose the possibility of measuring “intangible” benefits like recreation opportunities, mortality risks, and equity. These episodes, together with critiques of economics from philosophers of science, suggest we are best served by being as transparent as possible about the ways values influence BCA reasoning, without arrogating political decisions into it.

There are increasing calls for concrete suggestions on how to account for distributional impacts in policy analysis. Within the context of benefit-cost analysis, per se, one possibility is to apply “distributional weights,” to inflate costs and benefits experienced by poor or disadvantaged groups. We distinguish between “utility-weights,” intended to correct for the bias in willingness to pay caused by diminishing marginal utility of income, and “equity-weights,” intended to account for the possibility that decision makers might have disproportional concern about the welfare of the poor or other disadvantaged groups. We argue that utility-weights are appropriate and necessary to maintain the legitimacy of BCA as a measure of aggregate welfare, but that equity-weights are inappropriate because they involve moral judgments that should remain in the domain of democratically accountable decision makers, and because they conflate information about both the welfare and equity impacts of policies, making it impossible for decision-makers to apply their own moral values to the assessment of tradeoffs between welfare and equity. We offer concrete suggestions regarding the application of utility-weights and the calculation of a set of metrics to provide intuitively comprehensible and useful information about, and allow decision makers to quantitatively assess the tradeoffs between, welfare and equity caused by specific policies.

Prof. Marglin argues for a new economics and a new conception of welfare as part of the move to a sustainable future. However, the typical criticisms of the treatment of welfare in economics appear wide of the mark, and there are good reasons to regard this treatment as accurate enough for the job at hand. The critics appear to miss how demanding the job of reshaping economics in their (implicit) desired image would be, and how unproductive it might turn out to be to insist on such a reshaping as a precursor to serious action.

A recent contribution to research on age and well-being asserts that the impact of age on happiness is ‘u-shaped’ virtually everywhere. I evaluate that finding for European countries, considering whether it is robust to alternative methodological approaches. The analysis excludes control variables that are affected by age (noting that those variables are not antecedents of age) and explores the relationship via models that do not impose a quadratic functional form. The article shows that these alternative approaches do not produce a u-shape ‘everywhere’: u-shapes are evident for some countries, but for others, the pattern is quite different.

Research and development (R&D) planners in homeland security agencies would like to be able to prioritize investments in projects based on costs versus future safety and security benefits. While costs are often readily available, estimates of safety and security benefits are fraught with uncertainty. To address these challenges, a benefit–cost model of technological change is adapted to the homeland security context. Data are sparse; therefore, estimation is facilitated by developing a familiar linear welfare model using derivatives of cost and risk reduction functions to estimate areas of costs and benefits. The theoretical model is applied to two homeland security projects involving airport patrols and the assignment of U.S. federal air marshals to international flights. Retrospective data are available for most periods. Welfare-based rates of return are reported for the two cases, each of which is estimated to return large present value net benefits. Extensive sensitivity and Monte Carlo simulation explores uncertainties. Two important findings are that (i) given the rationality assumption, relative increases in security levels can be valued, even if the absolute level of security is not known; and (ii) large uncertainties about risk reduction exist but can be bounded by parametric sensitivity and uncertainty analysis.

In 2014, the National Highway Traffic Safety Administration finalized its rear visibility regulation, which requires cameras in all new vehicles, with the goal of allowing drivers to see what is behind them and thus reducing backover accidents. In 2018, the Trump administration embraced the regulation. The rear visibility rule raises numerous puzzles. First, Congress’ grant of authority was essentially standardless – perhaps the most open-ended in all of federal regulatory law. Second, it is not easy to identify a market failure to justify the regulation. Third, the monetized costs of the regulation greatly exceeded the monetized benefits, and yet on welfare grounds, the regulation can plausibly be counted as a significant success. Rearview cameras produce a set of benefits that are hard to quantify, including increased ease of driving, and those benefits might have been made a part of “breakeven analysis,” accompanying standard cost-benefit analysis. In addition, rearview cameras significantly improve the experience of driving, and it is plausible to think that in deciding whether to demand them, many vehicle purchasers did not sufficiently anticipate that improvement. This is a problem of limited foresight; rearview cameras are “experience goods.” A survey conducted in 2019 strongly supports this proposition, finding that about 56 % of consumers would demand at least $300 to buy a car without a rearview camera, and that fewer than 6 % would demand $50 or less. Almost all of that 6 % consists of people who do not own a car with a rearview camera. (The per-person cost is usually under $50.) These conclusions have general implications for other domains in which regulation has the potential to improve social welfare, even if it fails standard cost-benefit analysis; the defining category involves situations in which people lack experience with a good whose provision might have highly beneficial welfare effects.

“Uncertain futures” refers to a set of policy problems that possess some combination of the following characteristics: (i) they potentially cause irreversible changes; (ii) they are widespread, so that policy responses may make sense only on a global scale; (iii) network effects are difficult to understand and may amplify (or moderate) consequences; (iv) time horizons are long; and (v) the likelihood of catastrophic outcomes is unknown or even unknowable. These characteristics tend to make uncertain futures intractable to market solutions because property rights are not clearly defined and essential information is unavailable. These same factors also pose challenges for benefit-cost analysis (BCA) and other traditional decision analysis tools. The diverse policy decisions confronting decision-makers today demand “dynamic BCA,” analytic frameworks that incorporate uncertainties and trade-offs across policy areas, recognizing that: perceptions of risks can be uninformed, misinformed, or inaccurate; risk characterization can suffer from ambiguity; and experts’ tendency to focus on one risk at a time may blind policymakers to important trade-offs. Dynamic BCA – which recognizes trade-offs, anticipates the need to learn from experience, and encourages learning – is essential for lowering the likelihoods and mitigating the consequences of uncertain futures while encouraging economic growth, reducing fragility, and increasing resilience.

In benefit-cost analysis, fatality risk reductions are usually valued based on estimates of adults’ willingness to pay for changes in their own risks, regardless of whether the risk reduction accrues to adults or children. This approach reflects the relatively large number of valuation studies that address adults; however, the literature on children is growing. We review these studies, focusing on those that estimate values for both adults and children using a consistent approach to limit the effects of between-study variability. We rely on explicit selection criteria to identify studies that measure reasonably comparable outcomes and are candidates for application to analyses of U.S. policies. The ratio of values for children to values for adults ranges from 0.6 to 2.9; however, most estimates are greater than 1.5. Although some studies suggest that the divergence between child and adult values decreases as the child ages, this finding is not universal. We conclude that analysts should test the sensitivity of their results to the use of higher values for children than adults. Additional empirical research is needed to support more precise estimates of the variation in values by age that can be featured in the primary analysis.

Investing in global health and development requires making difficult choices about what policies to pursue and what level of resources to devote to different initiatives. Methods of economic evaluation are well established and widely used to quantify and compare the impacts of alternative investments. However, if not well conducted and clearly reported, these evaluations can lead to erroneous conclusions. Differences in analytic methods and assumptions can obscure important differences in impacts. To increase the comparability of these evaluations, improve their quality, and expand their use, this special issue includes a series of papers developed to support reference case guidance for benefit-cost analysis. In this introductory article, we discuss the background and context for this work, summarize the process we are following, describe the overall framework, and introduce the articles that follow.

The estimates used to value mortality risk reductions are a major determinant of the benefits of many public health and environmental policies. These estimates (typically expressed as the value per statistical life, VSL) describe the willingness of those affected by a policy to exchange their own income for the risk reductions they experience. While these values are relatively well studied in high-income countries, less is known about the values held by lower-income populations. We identify 26 studies conducted in the 172 countries considered low- or middle-income in any of the past 20 years; several have significant limitations. Thus there are few or no direct estimates of VSL for most such countries. Instead, analysts typically extrapolate values from wealthier countries, adjusting only for income differences. This extrapolation requires selecting a base value and an income elasticity that summarizes the rate at which VSL changes with income. Because any such approach depends on assumptions of uncertain validity, we recommend that analysts conduct a standardized sensitivity analysis to assess the extent to which their conclusions change depending on these estimates. In the longer term, more research on the value of mortality risk reductions in low- and middle-income countries is essential.

Advances in theoretical and computable general equilibrium modeling brought their conceptual foundations more in line with standard microeconomic constructs. This reduced the theoretical gap between welfare measurements using a partial or a general equilibrium approach. However, the separation of the partial and general equilibrium literatures lingers in many applications that this manuscript seeks to bridge. The now shared conceptual foundations, the importance of functional specification, the role of common price movements and closure rules are discussed. The continuing stricture in U.S. Government guidelines against including secondary effects in welfare measures is questioned.

Extrapolation of estimates of the value per statistical life (VSL) from high- to low- or middle-income populations requires attention to the possible effects of differences in income, current mortality risk, health, life expectancy, and many other factors. The standard theoretical model of VSL implies that VSL increases with income and decreases with current mortality risk. The effect of mortality risk is likely to be negligible while the effect of income is large and poorly quantified. Effects of differences in life expectancy and health are theoretically ambiguous. Effects of other factors, including differences in health care, formal and informal support networks, and cultural or religious factors that affect preferences for spending on oneself or others may be important but are unknown. Practical issues include choice of the most appropriate measure of income and possible differences in the patterns of age dependence between populations.

The value of small changes in mortality risks, generally expressed as the value per statistical life, is an important parameter in benefit-cost analysis. However, little is known about the values held by populations in low- and middle-income countries. This article introduces a symposium that includes three additional articles which explore related theory and research.

This study aimed to compare the neonatal outcomes of transplanted fifth day (D5) or sixth day (D6) frozen–thawed blastocysts, aiming to provide guidance when choosing blastocyst recovery methods. The clinical data of 1109 patients that were performed for recovered blastocyst transplantation, as well as the data of 515 patients who had already delivered were analyzed retrospectively. The patients were divided into single- or twins-birth groups according to blastocyst formation time (D5 or D6) and the number of fetus(es). The implantation rate, clinical pregnancy rate and live birth rate of the D5 group were all significantly higher than those in the D6 group (P < 0.05), and the biochemical pregnancy rate in the D5 group was significantly lower than that in the D6 group (P = 0.049). Other factors, including birth weight, birth length, incidence of low birth weight and sex ratio, differed between the D5 and D6 groups, but the difference was not statistically significant (P > 0.05). In conclusion, the implantation rate, clinical pregnancy rate and live birth rate in the D5 group were all significantly higher than that in the D6 group. The birth weight at D6 was prone to be heavier no matter the birth group, and the sex ratio in the D5 group was higher than that at D6, the difference in neonatal outcomes between the two groups was not statistically significant.

The estimated impacts, benefits, and costs of legalizing slot machines in Maryland are analyzed building on and contrasting with results from an impact analysis. The analysis provides estimates of the components and the total net benefits to the state and its citizens; the role of uncertainty, distributional impacts, and a basic tax alternative. The results forecast mostly positive net benefits for Maryland both in comparison to doing nothing and in comparison to raising an equivalent amount in taxes. However, if slot revenue raised from the lower income population is given more weight, then doing nothing or raising taxes appears to be preferred.

Notre contribution défend la thèse selon laquelle le paradoxe libéral-parétien de Sen plaide en faveur de l'élaboration d'un nouveau formalisme en termes de métaclassement des préférences. Il s'agit d'enrichir la structure traditionnelle des préférences par la prise en considération des motivations et des valeurs individuelles comme vise à le prouver l'analyse des tentatives de résolution du conflit Pareto-liberté que nous opérons tout d'abord. Puis, après avoir montré que le fait de tenir compte des motivations individuelles justifie un recours au concept de métaclassement des préférences, nous suggérons une solution au paradoxe libéral-parétien intégrant cette notion.

Le choix d'un taux d'actualisation est central dans l'évaluation de projets, d'autant plus que l'horizon sur lequel porte le projet est long. La discussion sur le taux d'actualisation approprié a ainsi connu un regain de vigueur à propos de projets à caractère environnemental, caractérisés par un très grand éloignement dans le temps des coûts et/ou des bénéfices, réduits à un niveau insignifiant par l'actualisation. Cet article est une synthèse des apports les plus récents de la littérature sur l'actualisation et l'environnement. La première approche consiste à remplacer le critère de bien-être social utilitariste escompté de l'approche usuelle par un autre critère, en se fondant sur des considérations d'équité intergénérationnelle. La deuxième se place sur un plan positif et non plus normatif, conteste l'idée d'un taux de préférence pure pour le présent constant et justifie par des considérations psychologiques sa décroissance au cours du temps. La troisième approche enfin justifie par l'incertitude sur le futur l'utilisation d'un taux d'escompte de la consommation décroissant au court du temps et faible à long terme. On met en évidence la grande difficulté qu'il existe à déterminer la « bonne » procédure concernant le choix d'un taux d'actualisation. Les arguments qui conduisent à adopter un taux d'escompte de la consommation décroissant au cours du temps sont cependant très convaincants, et l'article plaide pour cette approche. Le Royaume-Uni (dans le "Green Book") et la France (dans le rapport du groupe Lebègue pour le Commissariat Général au Plan) la retiennent d'ailleurs officiellement depuis peu, bien que d'importantes difficultés d'ordre pratique subsistent.

The application of manure phosphorus at rates above crop uptake has resulted in water pollution for some regions. In response, new manure management standards will require some farms to match manure phosphorus application rates with crop uptake. For some regions, this will lead to more crop acres and a shift toward crops with greater nutrient uptake, both of which will increase nitrogen runoff. The greater nitrogen runoff could offset the lower phosphorus runoff to result in greater water pollution. This demonstrates the law of unintended consequences, which results when policy does not consider how economic agents respond to incentives.