Law Commons^™

Rethinking Cost-Benefit Analysis, Matthew D. Adler, Eric A. Posner

Faculty Scholarship

This paper analyzes cost-benefit analysis from legal, economic, and philosophical perspectives. The traditional defense of cost-benefit analysis is that it maximizes a social welfare function that aggregates unweighted and unrestricted preferences. We follow many economists and philosophers who conclude that this defense is not persuasive. Cost-benefit analysis unavoidably depends on controversial distributive judgments; and the view that the government should maximize the satisfaction of unrestricted preferences is not plausible. However, we disagree with critics who argue that cost-benefit analysis produces morally irrelevant evaluations of projects and should be abandoned. On the contrary, cost-benefit analysis, suitably constrained, is consistent with a …