Cost–Benefit Analysis

Richard O. Zerbe Jr.

Cost–benefit analysis (CBA) is an accounting framework that compares benefits and costs associated with a project for the purposes of information and discussion. As discussed below, CBA is widely used by governments, and if used properly, can reduce unnecessary or inefficient government spending. Concerns in CBA considered below include whose benefits and costs should count, on what scale the analysis should be done, how to account for the value of future costs and benefits, and how to account for risk, uncertainty, and non-market values. CBA or benefit–cost analysis (BCA; these terms are used interchangeably) is an accounting framework for government projects. In this framework, benefits and costs associated with a public investment or decision are laid out for purposes of information and discussion. A related framework, widely used in health care but also in other areas, is cost-effectiveness analysis , sometimes known as least cost planning . In least cost ...

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