Working Papers

SBCA publishes working papers periodically via email to our newsletter subscribers. We welcome papers submitted by SBCA members on topics in benefit-cost analysis for circulation as part of this working paper series. The Society shares these papers as a service to its members and the benefit-cost analysis community. The Society for Benefit-Cost Analysis does not edit the papers before sharing and inclusion of a working paper here does not constitute endorsement by the Society of any of its content. 

Please send your submissions in the following format to

  • Title
  • Author(s) and affiliation(s)
  • Abstract
  • Link to paper online

Past working papers can be found below, under the date they were circulated.

June 5, 2018


Abstract: While regulatory agencies place high values on the benefits associated with the reduction in mortality risks due to regulations, these same agencies substantially undervalue lives in their enforcement efforts. The disparity between the valuation of prospective risks and fatalities that have occurred is often by several orders of magnitude, diminishing whatever safety incentives the regulations might have generated. A review of the practices by the major federal agencies with responsibility for product safety and occupational safety finds that the value placed on fatalities in agencies’ regulatory analyses can be a factor of 1,000 times greater than the magnitude of the corresponding sanctions that the agency levies for regulatory violations that led to the fatalities. The source of the mismatch between the valuation of prospective risks and fatalities that have occurred can be traced to agencies’ dated and restrictive legislative mandates. This Article proposes revisions in these statutes to create more appropriate, stronger safety incentives. Setting the pertinent price to deter excessive risks will also foster corporate risk analyses so long as companies are also provided with pertinent legal protections. 

Author: W. Kip Viscusi (University Distinguished Professor of Law, Economics, and Management, Vanderbilt Law School)

October 26, 2017

Cost-benefit Analysis for Flood Risk Management and Water Governance in the Netherlands

Abstract: The Netherlands is a global reference for flood risk management. This reputation is based on a mix of world-class civil engineering projects and innovative concepts of water governance. For more than a century, cost-benefit analysis has been important for flood risk management and water governance in the Netherlands. It has helped to select the most effective and efficient flood risk projects and to coordinate and reconcile the interests of various policy areas, levels of government and private stakeholders. This paper provides for the first time an overview of this well-developed practice. This includes the cost-benefit analysis in the 1901 act for enclosure of the Zuiderzee, van Dantzig’s famous formula for the economically optimal strength of dikes and a whole set of cost-benefit analyses for More room for rivers and the Delta Program for the next century. Dutch practice illustrates how cost-benefit analysis can support and improve flood risk management and water governance; other countries may learn from this. Rough calculations indicate that investing in cost-benefit analysis has been a highly profitable investment for Dutch society.

Authors: Frits Bos and Peter Zwaneveld (CPB Netherlands Bureau for Economic Policy Analysis)

May 4, 2017

A Distinction Between Benefit-Cost Analysis and Cost Benefit Analysis: Moral Reasoning and a Justification for Benefit Cost Analysis

Abstract: Cost benefit analysis (CBA) has been both vilified and supported in legal literature but misunderstood both in that literature and in the economic literature. The vilification is often wrong or muddled in both literatures. The fact is that a proper statement of CBA, which I call benefit-cost analysis, BCA, suggests it is quite compatible with moral decision making, provides a useful decision framework.

This article distinguishes between BCA and CBA. CBA is the traditional approach of valuation, built on the potential compensation test (“PCT”) of hypothetical compensation and the avoidance of distributional and other equity considerations. BCA is not built on such a hypothetical formulation. BCA recognizes rights and moral sentiments as values insofar as they are reflected in the willingness to pay (“WTP”) to obtain them and the willingness to accept (“WTA”) payment in return for giving them up. CBA is often limited to analyzing only the monetary, fair market value of property. BCA provides a more accurate measure of well-being, drops the CBA grounding in the PCT, and reflects moral sentiments in valuation, making it superior to CBA for many purposes and not inferior in any. The major moral criticism of the traditional CBA and the formulation here of BCA is that values are then determined by the willingness to pay for them or the willingness to accept payment to give them up, that is by wealth and income. But, wealth and income are values preserved by the legal system. Any system of valuation in a regime of law must begin with what is legal and end with what is legally possible. It is no legitimate criticism of BCA that it rests on law.

Author: Richard O. Zerbe (University of Washington)

May 4, 2017

Best Estimate Selection Bias of Estimates of the Value of a Statistical Life

Abstract: Selection of the best estimates of economic parameters frequently relies on the best estimate or a meta-analysis of the “best-set” of parameter estimates from the literature. Using an all-set dataset consisting of all reported estimates of the value of a statistical life (VSL) as well as a best-set sample of the best estimates from these studies, this article estimates statistically significant publication selection biases in each case. Biases are much greater for the best-set sample, as one might expect, given the subjective nature of the best-set selection process. While “best estimate selection bias” potentially exacerbates the problems associated with existing publication selection biases, the mean and median best-set estimates of the VSL are similar to those in the all-set sample. The bias-corrected estimate of the VSL for the all-set USA sample is $9.5 million and $11.5 million based on the CFOI data.

Author: W. Kip Viscusi (Vanderbilt University)

May 4, 2017

Shining a Light on Regulatory Costs

Abstract: President Trump’s Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs, has caused some confusion among the analysts, inside and outside federal agencies, who forecast the economic effects of regulations. Which effects should count as costs and which as benefits? It sounds like it should be an easy question, but it is not. Here are some wrinkles to consider.

Author: Brian Mannix (The George Washington University)

March 1, 2017

Anchoring Biases in International Estimates of the Value of a Statistical Life

Abstract: U.S. labor market estimates of the value of a statistical life (VSL) were the first revealed preference estimates of the VSL in the literature and continue to constitute the majority of such market estimates. The VSL estimates in U.S. studies consequently may have established a reference point for the estimates that researchers analyzing data from other countries are willing to report and that journals are willing to publish. This article presents the first comparison of the publication selection biases in U.S. and international estimates using a sample of 68 VSL studies with over 1,000 VSL estimates throughout the world. Publication selection biases vary across the VSL distribution and are greater for the larger VSL estimates. The estimates of publication selection biases distinguish between U.S. and international studies as well as between government and non-government data sources. Empirical estimates that correct for the impact of these biases reduce the VSL estimates, particularly for studies based on international data. This pattern of publication bias effects is consistent with international studies relying on U.S. estimates as an anchor for the levels of reasonable estimates. U.S. estimates based on the Census of Fatal Occupational Injuries constitute the only major set of VSL studies for which there is no evidence of statistically significant publication selection effects. Adjusting a baseline bias-adjusted U.S. VSL estimate of $9.6 million using estimates of the income elasticity of the VSL may be a sounder approach to generating international estimates of the VSL than relying on direct estimates from international studies.

Authors: W. Kip Viscusi (Vanderbilt University), Clayton J. Masterman (Vanderbilt University)

March 1, 2017

Consumer’s Guide to Regulatory Impact Analysis

Abstract: Regulatory impact analysis (RIA) weighs the benefits of regulatory proposals against the burdens they impose. Government agencies develop RIAs before issuing significant new regulations, and non-governmental interests may also present their own analyses of how different policies will affect outcomes. However, dense or complex RIAs can be challenging for policy officials and interested parties to comprehend and interpret, making it difficult to distinguish facts from conjecture and to understand the likely consequences of alternative policy choices. While numerous technical guidelines exist to aid development of RIAs, none is geared toward non-specialist policymakers and interested stakeholders who will be reading RIAs as consumers. This guide attempts to fill that gap. It first reviews the purpose of RIA, and then offers policy makers and other consumers of RIAs 10 tips for asking informed questions when reviewing and interpreting them.

Authors: Susan Dudley (The George Washington University Regulatory Studies Center), Richard Belzer (Regulatory Checkbook), Glenn Blomquist (University of Kentucky), Timothy Brennan (Resources for the Future), Christopher Carrigan (The George Washington University), Joseph Cordes (The George Washington University), Louis A. Cox (Cox Associates), Arthur Fraas (Resources for the Future), John Graham (Indiana University), George Gray (The George Washington University), James Hammitt (Harvard University), Kerry Krutilla (Indiana University), Peter Linquiti (The George Washington University), Randall Lutter (University of Virginia/Resources for the Future), Brian Mannix (George Washington University Regulatory Studies Center), Stuart Shapiro (Rutgers University), Anne Smith (NERA Economic Consulting), W. Kip Viscusi (Vanderbilt University), and Richard Zerbe (University of Washington)

March 1, 2017

The Post-Truth Era in Government Evaluation of Major Project and Policy Proposals

Abstract: Australian experience reveals an increasingly post-truth approach to economic evaluation, with governments ignoring or avoiding professional expertise when promoting their favoured projects and policies. Lack of formal guidelines for economic evaluation, such as those promulgated by Congress and successive American presidents, are a partial explanation. A concomitant hollowing-out of public service expertise in economic analysis has also occurred. More importantly, public sector agencies have even lost much of their capability to understand and assess evaluations carried out on their behalf by commercial consultants. An effective antidote to this deskilling would be the production and publication of analyses of major government policy and project proposals, as well as the development of a standardised analytical framework reinforced with training for public servants.

Authors: Leo Dobes (Australian National University)

June 21, 2016

Unquantified Benefits and the Problem of Regulation Under Uncertainty

Abstract: Regulatory agencies are required to perform cost-benefit analysis of major rules. However, in many cases regulators refuse to report a monetized value for the benefits of a rule that they issue. Sometimes, they report no monetized value; at other times, they report a monetized value but also state that not all benefits have been quantified. On occasion, regulators also refuse to monetize or fully monetize costs. These practices raise a puzzle. If a regulator chooses not to monetize all the benefits or all the costs, it is not doing cost-benefit analysis. If it is not doing cost-benefit analysis, what is it doing?  To investigate this question, we compiled a data set consisting of all major regulations issued by agencies from 2010 to 2013. We come to three conclusions. First, there are countless examples where agencies fail to fully monetize the benefits and costs of regulations. Second, in most cases, agencies could easily monetize or partially monetize those benefits and costs. Third, even where monetization would be difficult, the agencies could and should have made explicit the implicit valuations they relied on and supported those valuations as much as possible with empirical evidence. We then proceed to explain how agencies could engage in cost-benefit analysis even when they do not have a reliable basis for estimating valuations. Even where they lack complete data, agency regulators may be able to make reasonable guesses about the harms or benefits from regulations. In many cases, these guesses will be based on the experience and latent knowledge of the agency staff. These preliminary guesses constitute Bayesian prior probabilities. While agencies should be permitted to “guess”—that is, supply a subjective prior probability—they must also be required to update their estimates as they gain new information.

Authors: Jonathan S. Masur and Eric A. Posner (University of Chicago Law School)

June 21, 2016

A Benefit-Cost Analysis of the Middle Fork Greenway Trail

Abstract: The Town of Boone, NC Greenway Trail is a 3.84 mile long paved trail with additional unpaved sections that attract many types of users including walkers, joggers, and cyclists. The proposed Middle Fork New River extension would add 6.5 miles to the total paved mileage. In order to estimate recreation benefits of the extension we use revealed and stated preference data to estimate the change in value of current visits and change in visits with the additional mileage. The total opportunity cost of the project includes land acquisition, construction, operation and maintenance costs. Considering only recreation benefits the Middle Fork Greenway Trail passes a benefit-cost test. The net present value is estimated to be $2.78 million. This conclusion does not change after considering a number of partial sensitivity analyses.

Authors: John C. Whitehead, John Lehman and Melissa Weddell, Appalachian State University

June 21, 2016

Risk Beliefs and Preferences for E-Cigarettes

Abstract: Drawing on evidence from a new nationally representative survey, this article examines several measures of risk beliefs for e-cigarettes. For both lung cancer mortality risks and total smoking mortality risks, respondents believe that e-cigarettes pose risks that are lower than the risks of conventional tobacco cigarettes. However, people greatly overestimate the risk levels of e-cigarettes compared to the actual risk levels. Risk beliefs for conventional cigarettes receive at least a two-thirds informational weight in the formation of e-cigarette risk beliefs. Public perceptions of nicotine levels of e-cigarettes are closer to the beliefs for conventional cigarettes than are their health risk perceptions. Consumers’ desired uses of e-cigarettes are more strongly related to health risk perceptions than perceived e-cigarette nicotine levels. The overestimation of e-cigarette risks establishes a potential role for informational policies.​

Author: W. Kip Viscusi (Vanderbilt University)

June 21, 2016

Exploring Cost-Benefit Analysis of Research, Development and Innovation Infrastructures: An Evaluation Framework

Abstract: Governments, funding agencies and policy makers have high expectations for research, development and innovation (RDI) infrastructures in the context of science and innovation policies aimed at sustaining economic growth in the long term. The stakes associated with their selection and evaluation are therefore high. Cost-benefit analysis of RDI infrastructures is a new field. The intangible nature of some benefits and the uncertainty associated to the achievement of research results have often discouraged the use of a proper CBA for RDI infrastructures. Recently, some attempts to develop a CBA theoretical framework for RDI infrastructures have been made in the context of the use of Structural Funds by the Czech government and JASPERS. Moreover, the new Guide for the CBA of investment projects in the context of Cohesion Policy, recently adopted by the European Commission (2014) provides guidelines to appraise RDI projects, but also admits that – due to lack of experience and best practices – further steps are needed to improve the evaluation framework.

This paper presents the results and the lessons learned on how to apply ex-ante CBA for major RDI infrastructures by a team of economists and scientists at the University of Milan and CSIL during a three-year research project supported by a EIBURS grant of the European Investment Bank Institute. Albeit the comprehensive conceptual framework presented in the paper builds on principles firmly rooted in CBA tradition, their application to the RDI sector is still in its infancy. So far, the model has been applied on two cases in physics involving particle accelerators (the Large Hadron Collider (LHC) at CERN and the National Centre for Oncological Treatment (CNAO) in Italy)). In a nutshell, the model presented breaks down benefits into two broad classes: i) use benefits, held by different categories of infrastructure’s users such as scientists, firms, students and general public visitors, and ii) non-use benefits, denoting the social value for the discovery potential of the RDI infrastructure regardless of its actual or future use. We argue that the social value of discovery can be estimated with contingent valuation techniques. Another significant feature of our approach is the stochastic nature of the CBA model, intended to deal with the uncertainty and risk of optimism bias in the estimates.

Authors: Massimo Florio (Department of Economics, Management and Quantitative Methods, University of Milan), Chiara Pancotti (CSIL Centre for Industrial Studies, Milan), Emanuela Sirtori (CSIL Centre for Industrial Studies, Milan), Silvia Vignetti (CSIL Centre for Industrial Studies, Milan), Stefano Forte (TIF Lab, Department of Physics, University of Milan and INFN Milan)