The issue of standing in cost-benefit analysis

Insufficient attention has been given in cost-benefit analysis to whose benefits are to be counted. Foreigners, illegal aliens, fetuses, and criminals are problematic cases. Persons or entities may be given “standing” by participation in decision processes; by having their preferences counted, if meaningful preferences exist; by having their welfare counted, if they cannot express their preferences; or by representation by others whom they do not choose. Problems of standing arise in the valuation of life, the consideration of future generations and nonhuman entities, and equity weighting. These problem may be treated by altering the scope of the expert community or by interaction between that community and the political community. They are not always resolvable, but should be treated more explicitly.     

Who has standing in cost-benefit analysis?

The issues involved in deciding whose preferences are to be counted in cost-benefit analysis are often misunderstood or controversial. This paper attempts to resolve the issues in a number of particular cases by looking to the fundamental value assumptions underlying cost-benefit analysis. Cost-benefit analysis is useful only to the extent that there exists a general consensus that the value assumptions are legitimate. Certain implications of the value assumptions prove useful in deciding what preferences have standing.     

Quadratic voting as an input to cost-benefit analysis

When agencies regulate, they must calculate the costs and benefits of their regulations. To do this, they must often price non-market goods—for instance, the value of protecting wildlife or the environment. Regulators have typically relied upon contingent valuation surveys to put prices on these types of goods. But contingent valuation surveys are fraught with error and often give rise to implausible valuations that cannot be trusted. Quadratic voting offers a better solution. Agencies should hold quadratic votes over nonmarket goods and use those votes to price the goods at issue.     

Deep-draft dredging of U.S. coal ports: A cost-benefit analysis

This article discusses whether U.S. society should invest in large-scale coal port development and examines specifically financing the deep-draft dredging of coal ports on the East and/or Gulf Coasts (Baltimore, Hampton Roads, Mobile, and New Orleans) so that fully loaded, large coal-carrying colliers can export coal to Western Europe. By assuming a society-wide perspective, no costs and benefits are attributed to various parties. Although the multifaceted nature of the coal port issue is acknowledged, the core of this study is a large number of different simulations. Each simulation optimizes the United States-Western Europe coal trade for a given demand, ocean transportation cost structure, and cost of capital. This relatively simple model focuses on the key tradeoff: the cost of dredging versus lower ocean transportation costs. The study supports those recommending caution in coal port development. The most striking conclusion is the robustness of two solutions - no dredging or dredge only Hampton Roads - depending on the assumptions. Our conclusions also generally do not support simultaneously dredging all deep-draft options, the concurrent dredging of more than one port, or dredging either of the Gulf ports before the two East Coast ports.     

Assessing preferences in cost-benefit analysis: Reflections on rural water supply evaluation in haiti

This article examines an area of cost-benefit methodology which has come under increasing philosophical scrutiny in recent years: the appropriate treatment of individuals' preferences. We illustrate some of the difficulties involved in assessing preferences in the context of a concrete example: the evaluation of a rural water supply project in southern Haiti. Four problems in the application of cost-benefit principles are discussed: (1) how to count the social value of private water taps connected to homes if they are preferred for prestige reasons, (2) how to assess husbands' preferences concerning the time savings by wives who previously carried water from more distant sources, (3) how to count preferences based on a respondent's desire to support general community welfare, and (4) how to evaluate a water project when people's preferences may change after the new water system is installed. We argue that policy analysis will be improved by presenting philosophical arguments as to why some preferences should be included in the evaluation and others ignored.     

Organizational and Spatial Determinants of Fiscal Stress: An analysis of Norwegian Municipalities

Two types of factors are thought to lead to fiscal stress of municipalities in Norway: municipal organization and spatial characteristics. Organizational and political factors include the rationality of the agency of government, the ability of the resource coordinator to achieve a balance, and the coordination of governmental policies. Spatial factors include industrial presence and north-south regional differences. Only the two spatial variables are significantly correlated with the budget difficulties. Case studies, though, show organizational factors and the interplay between organizational and spatial factors can be important determinants for fiscal stress.     

Learning in government programs and the usefulness of cost-benefit analysis: Lessons from manpower and urban renewal history

Especially in the social program area, the outcomes of new programs are extremely difficult to predict, and it is rarely clear a priori which of several competing program techniques ought to be tried. In such an atmosphere, ex post program evaluation methods which take account of possibilities of “learning by doing” can promote the selection over time of those program elements which maximize beneficial results per unit cost. A basic premise of this paper is that recent applications of cost-benefit techniques have frequently ignored learning considerations, greatly reducing their usefulness. The “learning by doing” features of the recent history of manpower and urban renewal programs are examined to demonstrate the plausibility of this premise.     

Some thoughts on the use and misuse of statistical inference

The abuse of techniques of statistical inference resulting from inadequate attention to the relationship between the model used and the real world problem being addressed, and inappropriate interpretation of conclusions in the light of that relationsip, are discussed. The basic principle underlying all statistical inference is that we attempt to distinguish between alternatives by comparing observed behavior with that predicted by predictive models of those alternatives. The use of predictive models which do not describe the behavior of the alternatives between which we wish to distinguish is a clear violation of that principle. The principle is illustrated in a discussion of sampling from an urn. The technique of causal inference through partial correlation analysis is discussed as an example of the violation of this principle. On the surface this technique appears to have wide applicability in analyses in support of policy studies, but further examination shows its applicability to be somewhere between highly questionable and totally specious.     

The ethical poverty of cost-benefit methods: Autonomy,efficiency and public policy choice

The principle of efficiency holds as the basic standard of market decision-making. Routinely however, it has been applied as a standard of judgement to public choices as well. This essay proceeds on the basis of four assumptions. First, that efficiency, outside the market context, has two manifestations (Cost-Effectiveness Analysis and Cost-Benefit Methods) which are made distinct by one's concentration on judging the most cost-effective means to policy ends otherwise arrived at, and the other's use of efficiency to judge both the means and end of policy choice. Second, that although efficiency is a fit primary decision standard within a competitive market a principle with more distinctly moral weight is needed to judge ends outside of markets. Third, that one possible source of this moral weight is individual autonomy or freedom that is a fit ethical principle upon which to set the ends of public policy. Fourth, that the use of cost-benefit methods rather than cost-effectiveness analysis implies that it can satisfy the requirements of both efficiency and autonomy. If the efficient policy choice also provided protection of individual autonomy then cost-benefit methods could be used for the analysis of public policy ends, but if it fails to have a deeper moral justification then the role of efficiency in the public sector must be limited only to its judgement of cost-effective means to policy ends arrived at by a non-efficiency standard. I will argue that the autonomy of individual choice in a market is a thin and morally impoverished ethical standard of judgement that adds no additional moral weight to market efficiency for the judgements of policy ends. This conclusion limits efficiency to the consideration of public means alone, eliminating cost-benefit methods as a fit approach to policy analysis while simultaneously promoting cost-effectiveness analysis and the search for an independent moral standard for the assessment of public ends.This essay was originally prepared for the 1989 meeting of the APSA in Atlanta and I wish to thank all those who read and commented on my work at that time. In addition, I would like to thank those who participated in its evolution to this form: Douglas MacLean, Mark Sagoff, Brian Barry, Alan Donagan, Russell Hardin, Maurice Wade, Andy Gold, Thomas Reilly, Diana Evans, an anonymous reviewer at Policy Sciences and its two editors, William Ascher and G. Brewer.     

Norwegian Coalition Governments and the Management of Party Relations*

The aim of this article is to analyse the political leaders efforts to organize and manage relations between relevant party actors in a way that is suitable for the operation and preservation of coalition governments. Five coalition governments serve as illustrative cases showing how these relations have been managed in post-war Norway. The similarities between the different government coalitions arc obvious. There are, however, interesting variations concerning the priority given to coordination and unity versus party differences and profilation.     

Voter information and electoral outcomes: the Norwegian list of shame

This paper studies the effect on vote shares and reelection probability for the incumbent’s party from a signal indicating poor fiscal performance. In Norway, local governments with persistent deficits are placed in the Register for State Review and Approval of Financial Obligations (Robek). In addition to increased central government monitoring, placement in Robek triggers a great deal of attention in the local media. It is thus expected to raise voter awareness of the fiscal stance of the local government. The results indicate that voters value the information embedded in this signal, and take it into account when casting their votes. Both the share of votes for the incumbent’s party and the probability that the incumbent party stays in office is significantly reduced as a consequence of the local government being included in the register. The vote share for the incumbent is reduced by about three percentage points, while the reelection probability is reduced by about 0.12.     

The Norwegian Storting: The Central Assembly of the Periphery*

The overall impression of Norway given by Rokkan and Urwin in their classification of state-building and nation-building processes in western Europe is characterized by the domination of a strong centre over weak peripheries. In a comparative perspective this may be the most conspicuous tendency. The influence of the Norwegian periphery, however, is quite substantial. The aim of this article is to contribute to a more nuanced picture of centreperiphery relations in Norwegian politics. It takes a closer look at the representation of the periphery in the Norwegian parliament, and at the impact of geography on policy-making and other activities of MPs.     

Economic and political determinants of fee income in Norwegian local governments

This paper presents an empirical analysis of the determinants of fee income in Norweigan local governments. The point of departure is a representative voter model emphasizing the effects of pure economic variables. The benchmark model is extended by including two aspects of the political system: ideology and strength. It is evident that increased socialist influence increases the size of the local public sector, while a strong political leadership has an advantage in opposing pressure to increase spending.