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Project evaluation with democratic decision-making: What does cost–benefit analysis really measure?
- Nyborg, Karine
- Ecological economics 2014 v.106 pp. 124-131
- cost benefit analysis, decision making, willingness to pay
- It is often argued that projects involving public good changes should be chosen on the basis of monetary valuation and cost–benefit analysis (CBA). However, CBA is not value-free. When used to measure welfare, it is based on highly controversial value judgements. When used to measure efficiency, it is based on assumptions of limited relevance to democratic decision-making processes. CBA measures total net willingness to pay, neither more nor less. While interesting in its own right, the normative significance of this indicator is not obvious.