Premium
Risk in Benefit‐Cost Analysis
Author(s) -
Schulze William D.,
Kneese Allen V.
Publication year - 1981
Publication title -
risk analysis
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.972
H-Index - 130
eISSN - 1539-6924
pISSN - 0272-4332
DOI - 10.1111/j.1539-6924.1981.tb01362.x
Subject(s) - utilitarianism , variety (cybernetics) , risk analysis (engineering) , cost–benefit analysis , public economics , economics , libertarianism , actuarial science , law and economics , economic analysis , management science , environmental economics , positive economics , business , political science , computer science , law , artificial intelligence , agricultural economics
In recent years, benefit‐cost analysis has been increasingly applied to large societal decision problems (such as developing a fast breeder energy economy) which involve both risks to society and analysis of very long‐term consequences possibly extending over many human generations. This paper examines the philosophical underpinnings of the technique which is a special case of utilitarianism, and compares implications of the technique to those arising from alternative ethical systems in analyzing questions of public safety. Ethical systems which emphasize the good of the whole, such as utilitarianism, are shown to differ sharply in decision outcomes from those which emphasize the rights of the individual, such as libertarianism. It is suggested that benefit‐cost analysis should be broadened to include alternative weightings of benefits and costs consistent with a variety of ethical views.