Journal Article

Distributionally Weighted Cost–Benefit Analysis: Welfare Economics Meets Organizational Design

David A. Weisbach

in Journal of Legal Analysis

Volume 7, issue 1, pages 151-182
Published in print June 2015 | ISSN: 2161-7201
Published online December 2014 | e-ISSN: 1946-5319 | DOI: https://dx.doi.org/10.1093/jla/lau009

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Approaches to cost–benefit analysis (CBA) derived from social welfare maximization conclude that it ideally should include distributional weights. Agencies using CBA, however, do not maximize welfare. They perform specialized tasks. Approaches that assume agencies should maximize welfare cannot be used to determine the design of those tasks. This article considers the design of CBA, including the pursuit of distributional goals by mapping optimal distributive systems to tasks performed by specialized agencies. It concludes that regulatory agencies using CBA cannot make distributional adjustments consistent with desirable distributive policies. Therefore, CBA should not include distributive weights.

Journal Article.  13809 words. 

Subjects: Jurisprudence and Philosophy of Law ; Economics

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