In almost every country, government is the largest buyer of works, goods, and services from the private sector. Through the laws and practice of public procurement, governments create competition among firms, thus optimizing public expenditure. However, public procurement is often associated with inefficient allocation of resources and corruption. One method to reduce inefficiencies and abuse in public procurement is the use of e-government procurement (e-GP) platforms. Yet nearly 40% of countries—mostly low- and lower-middle income countries—do not have functioning e-GP platforms. Cost–benefit analysis is used to make the investment case for the development and integration of e-procurement systems in low- and lower middle-income countries. The costs of setting up an e- GP system include an initial investment of $9.03 million, on average, for the planning, design, and build phases spread over a 5-year period. Annual operating and maintenance expenses during pilot and deployment phases are estimated at $1.1 million annually. In total, it is estimated that the net present value of costs to design, build, test, deploy, and operate a robust e-GP system is $16.7 million for a typical low- and middle-income country (at an 8% discount rate). While there are many tangible benefits of e-GP, the benefit assessed here is the reduction in the prices of goods, works, and services paid by government buyers. Using the average percentage reduction in procurement prices of 6.75%, the savings from an e-procurement system are valued at $637.9 million and $5.2 billion for low- and lower middle-income countries, respectively. The benefit–cost ratio of implementing an e-GP system in the average low-income country ranges from 8 to 58 and is 142 to 473 for a lower middle-income country. The size of the procurement market, the reduction in procurement prices, the duration of the implementation process, and the penetration rate of e-GP throughout government are principal determinants in the return on investment.
{"title":"The Investment Case for E-Government Procurement: A Cost–Benefit Analysis","authors":"E. Bosio, G. Hayman, Nancy Dubosse","doi":"10.1017/bca.2023.10","DOIUrl":"https://doi.org/10.1017/bca.2023.10","url":null,"abstract":"In almost every country, government is the largest buyer of works, goods, and services from the private sector. Through the laws and practice of public procurement, governments create competition among firms, thus optimizing public expenditure. However, public procurement is often associated with inefficient allocation of resources and corruption. One method to reduce inefficiencies and abuse in public procurement is the use of e-government procurement (e-GP) platforms. Yet nearly 40% of countries—mostly low- and lower-middle income countries—do not have functioning e-GP platforms. Cost–benefit analysis is used to make the investment case for the development and integration of e-procurement systems in low- and lower middle-income countries. The costs of setting up an e- GP system include an initial investment of $9.03 million, on average, for the planning, design, and build phases spread over a 5-year period. Annual operating and maintenance expenses during pilot and deployment phases are estimated at $1.1 million annually. In total, it is estimated that the net present value of costs to design, build, test, deploy, and operate a robust e-GP system is $16.7 million for a typical low- and middle-income country (at an 8% discount rate). While there are many tangible benefits of e-GP, the benefit assessed here is the reduction in the prices of goods, works, and services paid by government buyers. Using the average percentage reduction in procurement prices of 6.75%, the savings from an e-procurement system are valued at $637.9 million and $5.2 billion for low- and lower middle-income countries, respectively. The benefit–cost ratio of implementing an e-GP system in the average low-income country ranges from 8 to 58 and is 142 to 473 for a lower middle-income country. The size of the procurement market, the reduction in procurement prices, the duration of the implementation process, and the penetration rate of e-GP throughout government are principal determinants in the return on investment.","PeriodicalId":45587,"journal":{"name":"Journal of Benefit-Cost Analysis","volume":"28 1","pages":""},"PeriodicalIF":3.4,"publicationDate":"2023-06-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90974698","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract In addition to effects from greenhouse gases, climate change is affected by short-lived climate forcers (SLCF). These are often co-emitted with carbon dioxide, and some are regulated air pollutants. In the governance of these pollutants, established estimates of damage costs of pollution inform benefit–cost analyses. However, climate change impact of SLCFs is omitted from these estimates. The purpose of this study is to calculate economic damage costs of air pollutants’ effect on climate change and compare these with established damage costs. Focus is on European emissions governed in the EU National Emission Reduction Commitments Directive during 2020–2050. We use well-known SLCF emission metrics and multiply with literature values on social costs of methane to calculate climate damage costs of SLCFs. The results indicate that average absolute climate damage costs are highest for black carbon ($59,500/ton in 2050) and lowest for nonmethane volatile organic compounds ($661/ton). Our indicative values are likely underestimations. Indicative climate damage costs are usually lower than established damage costs, with notable exceptions. We propose that more detailed studies are necessary, and that inclusion of climate damage costs into economic valuation of SLCFs is important for future air pollution and climate benefit–cost analyses.
{"title":"An Assessment of the Climate Damage Costs of European Short-Lived Climate Forcers","authors":"Stefan Åström, Lovisa Källmark","doi":"10.1017/bca.2023.8","DOIUrl":"https://doi.org/10.1017/bca.2023.8","url":null,"abstract":"Abstract In addition to effects from greenhouse gases, climate change is affected by short-lived climate forcers (SLCF). These are often co-emitted with carbon dioxide, and some are regulated air pollutants. In the governance of these pollutants, established estimates of damage costs of pollution inform benefit–cost analyses. However, climate change impact of SLCFs is omitted from these estimates. The purpose of this study is to calculate economic damage costs of air pollutants’ effect on climate change and compare these with established damage costs. Focus is on European emissions governed in the EU National Emission Reduction Commitments Directive during 2020–2050. We use well-known SLCF emission metrics and multiply with literature values on social costs of methane to calculate climate damage costs of SLCFs. The results indicate that average absolute climate damage costs are highest for black carbon ($59,500/ton in 2050) and lowest for nonmethane volatile organic compounds ($661/ton). Our indicative values are likely underestimations. Indicative climate damage costs are usually lower than established damage costs, with notable exceptions. We propose that more detailed studies are necessary, and that inclusion of climate damage costs into economic valuation of SLCFs is important for future air pollution and climate benefit–cost analyses.","PeriodicalId":45587,"journal":{"name":"Journal of Benefit-Cost Analysis","volume":"40 1","pages":"230 - 250"},"PeriodicalIF":3.4,"publicationDate":"2023-06-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139370601","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We review the practice of safety benefits analysis for federal transportation regulations in the USA. Using a case-study approach, we explore the linkages between risk assessment and benefits analysis, adding to previous work exploring these linkages for environmental health regulations. Challenges for calculating the benefits of transportation safety regulations arise because safety outcomes, like many noncancer health effects, typically do not have formal risk relationships like dose–response functions established for them. Analysts often rely on engineering or other expert judgments or resort to qualitative discussions to connect a regulatory intervention to its intended outcome. Challenges also arise when regulatory outcomes are intangible or do not have established metrics. Safety outcomes are not always measurable in concrete terms like mortality risk and may include difficult-to-operationalize concepts like “safety culture.” If the outcome is not measurable, then quantifying or monetizing the expected effects of a regulation is not possible, and the ability to conduct robust qualitative discussions also may be limited. Economists evaluating benefits for safety regulations encounter limitations analogous to difficulties found in health regulations. To inform policymaking effectively, economists and safety experts could look to the relationship developed in environmental economics between economists and health scientists.
{"title":"Assessing Risk, Effectiveness, and Benefits in Transportation Regulation","authors":"D. V. Aiken, S. Brumbaugh","doi":"10.1017/bca.2023.19","DOIUrl":"https://doi.org/10.1017/bca.2023.19","url":null,"abstract":"\u0000 We review the practice of safety benefits analysis for federal transportation regulations in the USA. Using a case-study approach, we explore the linkages between risk assessment and benefits analysis, adding to previous work exploring these linkages for environmental health regulations. Challenges for calculating the benefits of transportation safety regulations arise because safety outcomes, like many noncancer health effects, typically do not have formal risk relationships like dose–response functions established for them. Analysts often rely on engineering or other expert judgments or resort to qualitative discussions to connect a regulatory intervention to its intended outcome. Challenges also arise when regulatory outcomes are intangible or do not have established metrics. Safety outcomes are not always measurable in concrete terms like mortality risk and may include difficult-to-operationalize concepts like “safety culture.” If the outcome is not measurable, then quantifying or monetizing the expected effects of a regulation is not possible, and the ability to conduct robust qualitative discussions also may be limited. Economists evaluating benefits for safety regulations encounter limitations analogous to difficulties found in health regulations. To inform policymaking effectively, economists and safety experts could look to the relationship developed in environmental economics between economists and health scientists.","PeriodicalId":45587,"journal":{"name":"Journal of Benefit-Cost Analysis","volume":"2 1","pages":""},"PeriodicalIF":3.4,"publicationDate":"2023-06-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89471175","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Intentional violence against healthcare workers inflicts a physical and mental toll, motivating legislative proposals to better regulate these occupational risks. This article uses this context to address two novel issues for benefit assessment raised by injuries from assailants: potential heterogeneity in valuation based on the context of the injury risk and possible reductions in self-reported valuations when the exposed population has been trained to feel responsible for the risk. This article presents experimental evidence on workers’ preferences over the form of intervention: protection (risk reduction) or insurance (cost-sharing). The experiment also elicits worker valuations of occupational health care risks, calculating the value of a statistical injury (VSI), based on local wage-risk tradeoffs, in the general range of $200,000. Workers accord a premium to risk reductions that might eliminate the risk of injuries. Both the physical harm and the process by which the injury occurs may affect benefit assessments for the regulation of workplace violence. Non-healthcare participants require a $40,000 premium per expected injury resulting from intentional harm. While health care workers do not generally require such a premium, health care workers in clinical positions require more compensation to face occupational risks. Insurance coverage for monetary losses is more highly valued than protective measures for accidental harms, though there is no significant comparable preference for insurance against intentional harms. The results have important practical implications for addressing the concerning phenomenon of violence against healthcare workers, suggesting that expanding insurance compensation would be desirable, as would assigning an intentionality premium to intentional injuries.
{"title":"When Patients are Assailants: Valuing Occupational Risks in Health Care","authors":"Elissa P. Gentry, W. Viscusi","doi":"10.1017/bca.2023.21","DOIUrl":"https://doi.org/10.1017/bca.2023.21","url":null,"abstract":"Abstract Intentional violence against healthcare workers inflicts a physical and mental toll, motivating legislative proposals to better regulate these occupational risks. This article uses this context to address two novel issues for benefit assessment raised by injuries from assailants: potential heterogeneity in valuation based on the context of the injury risk and possible reductions in self-reported valuations when the exposed population has been trained to feel responsible for the risk. This article presents experimental evidence on workers’ preferences over the form of intervention: protection (risk reduction) or insurance (cost-sharing). The experiment also elicits worker valuations of occupational health care risks, calculating the value of a statistical injury (VSI), based on local wage-risk tradeoffs, in the general range of $200,000. Workers accord a premium to risk reductions that might eliminate the risk of injuries. Both the physical harm and the process by which the injury occurs may affect benefit assessments for the regulation of workplace violence. Non-healthcare participants require a $40,000 premium per expected injury resulting from intentional harm. While health care workers do not generally require such a premium, health care workers in clinical positions require more compensation to face occupational risks. Insurance coverage for monetary losses is more highly valued than protective measures for accidental harms, though there is no significant comparable preference for insurance against intentional harms. The results have important practical implications for addressing the concerning phenomenon of violence against healthcare workers, suggesting that expanding insurance compensation would be desirable, as would assigning an intentionality premium to intentional injuries.","PeriodicalId":45587,"journal":{"name":"Journal of Benefit-Cost Analysis","volume":"15 1","pages":"356 - 385"},"PeriodicalIF":3.4,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139371872","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study is an attempt to determine whether the need to get hydropower project appraisals perfectly right during the pre-construction phase, so as to prevent significant overruns along with benefit shortfalls, should supersede the need to deliver projects at the earliest possible time so as to meet the needs of the people. To achieve the study objective, we test whether the Hiding Hand principle is predominantly benevolent or malevolent. We argue that if the Hiding Hand is benevolent, then project stakeholders are better off focusing on the quick delivery of power projects; however, if it is malevolent, then more attention should be given to perfecting project appraisals. It transpires from the statistical analysis that the Benevolent Hiding Hand dominates the Malevolent Hiding Hand in the selected World Bank-financed hydropower projects (33% v. 21%), and that ultimately, 75% of the projects were even more successful than anticipated—while 25% of the projects failed. Our findings further show that while a total loss of 2.335 billion USD in the sampled dams was caused by the Malevolent Hiding Hand, 11.259 billion USD was gained as a result of the Benevolent Hiding Hand. The predominance of the Benevolent Hiding Hand justifies placing some weight on proceeding with hydropower projects that show significant promise even if all the implantation risks are not fully quantified at the appraisal stage, especially in developing countries.
{"title":"A Test of Hirschman’s Hiding Hand Principle in World Bank-Financed Hydropower Projects","authors":"G. Olasehinde-Williams, G. Jenkins","doi":"10.1017/bca.2023.18","DOIUrl":"https://doi.org/10.1017/bca.2023.18","url":null,"abstract":"\u0000 This study is an attempt to determine whether the need to get hydropower project appraisals perfectly right during the pre-construction phase, so as to prevent significant overruns along with benefit shortfalls, should supersede the need to deliver projects at the earliest possible time so as to meet the needs of the people. To achieve the study objective, we test whether the Hiding Hand principle is predominantly benevolent or malevolent. We argue that if the Hiding Hand is benevolent, then project stakeholders are better off focusing on the quick delivery of power projects; however, if it is malevolent, then more attention should be given to perfecting project appraisals. It transpires from the statistical analysis that the Benevolent Hiding Hand dominates the Malevolent Hiding Hand in the selected World Bank-financed hydropower projects (33% v. 21%), and that ultimately, 75% of the projects were even more successful than anticipated—while 25% of the projects failed. Our findings further show that while a total loss of 2.335 billion USD in the sampled dams was caused by the Malevolent Hiding Hand, 11.259 billion USD was gained as a result of the Benevolent Hiding Hand. The predominance of the Benevolent Hiding Hand justifies placing some weight on proceeding with hydropower projects that show significant promise even if all the implantation risks are not fully quantified at the appraisal stage, especially in developing countries.","PeriodicalId":45587,"journal":{"name":"Journal of Benefit-Cost Analysis","volume":"37 1","pages":""},"PeriodicalIF":3.4,"publicationDate":"2023-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84982157","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract There are increasing calls for concrete suggestions on how to account for distributional impacts in policy analysis. Within the context of benefit-cost analysis, per se, one possibility is to apply “distributional weights,” to inflate costs and benefits experienced by poor or disadvantaged groups. We distinguish between “utility-weights,” intended to correct for the bias in willingness to pay caused by diminishing marginal utility of income, and “equity-weights,” intended to account for the possibility that decision makers might have disproportional concern about the welfare of the poor or other disadvantaged groups. We argue that utility-weights are appropriate and necessary to maintain the legitimacy of BCA as a measure of aggregate welfare, but that equity-weights are inappropriate because they involve moral judgments that should remain in the domain of democratically accountable decision makers, and because they conflate information about both the welfare and equity impacts of policies, making it impossible for decision-makers to apply their own moral values to the assessment of tradeoffs between welfare and equity. We offer concrete suggestions regarding the application of utility-weights and the calculation of a set of metrics to provide intuitively comprehensible and useful information about, and allow decision makers to quantitatively assess the tradeoffs between, welfare and equity caused by specific policies.
{"title":"Distributional weighting and welfare/equity tradeoffs: a new approach","authors":"Dan Acland, D. Greenberg","doi":"10.1017/bca.2023.5","DOIUrl":"https://doi.org/10.1017/bca.2023.5","url":null,"abstract":"Abstract There are increasing calls for concrete suggestions on how to account for distributional impacts in policy analysis. Within the context of benefit-cost analysis, per se, one possibility is to apply “distributional weights,” to inflate costs and benefits experienced by poor or disadvantaged groups. We distinguish between “utility-weights,” intended to correct for the bias in willingness to pay caused by diminishing marginal utility of income, and “equity-weights,” intended to account for the possibility that decision makers might have disproportional concern about the welfare of the poor or other disadvantaged groups. We argue that utility-weights are appropriate and necessary to maintain the legitimacy of BCA as a measure of aggregate welfare, but that equity-weights are inappropriate because they involve moral judgments that should remain in the domain of democratically accountable decision makers, and because they conflate information about both the welfare and equity impacts of policies, making it impossible for decision-makers to apply their own moral values to the assessment of tradeoffs between welfare and equity. We offer concrete suggestions regarding the application of utility-weights and the calculation of a set of metrics to provide intuitively comprehensible and useful information about, and allow decision makers to quantitatively assess the tradeoffs between, welfare and equity caused by specific policies.","PeriodicalId":45587,"journal":{"name":"Journal of Benefit-Cost Analysis","volume":"17 1","pages":"68 - 92"},"PeriodicalIF":3.4,"publicationDate":"2023-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74635579","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ping Qin, Yifei Quan, A. Liu, Joshua Linn, Jun Yang
Motivated by traffic congestion and air pollution, Beijing is one of several major cities to restrict vehicle ownership by requiring residents to win a lottery for the right to obtain an additional car. We examine the welfare cost of preventing people from owning cars because of misallocation: under a lottery, some individuals with low willingness to pay (WTP) for cars can obtain cars, while other individuals with high WTP cannot. We estimate welfare costs using a new contingent valuation method survey of Beijing lottery participants which we designed and conducted explicitly for this purpose. We find that restricting vehicle ownership reduced private welfare by 26 billion yuan. Back-of-the-envelope calculations suggest that the benefits of lower congestion and pollution roughly equal the costs. Our WTP estimates indicate a net welfare gain of approximately 32 billion yuan if Beijing’s lottery were replaced with an auction, which is similar to previous estimates.
{"title":"The Welfare Cost of Beijing’s Lottery Policy: Evidence from a Contingent Valuation Survey","authors":"Ping Qin, Yifei Quan, A. Liu, Joshua Linn, Jun Yang","doi":"10.1017/bca.2023.9","DOIUrl":"https://doi.org/10.1017/bca.2023.9","url":null,"abstract":"\u0000 Motivated by traffic congestion and air pollution, Beijing is one of several major cities to restrict vehicle ownership by requiring residents to win a lottery for the right to obtain an additional car. We examine the welfare cost of preventing people from owning cars because of misallocation: under a lottery, some individuals with low willingness to pay (WTP) for cars can obtain cars, while other individuals with high WTP cannot. We estimate welfare costs using a new contingent valuation method survey of Beijing lottery participants which we designed and conducted explicitly for this purpose. We find that restricting vehicle ownership reduced private welfare by 26 billion yuan. Back-of-the-envelope calculations suggest that the benefits of lower congestion and pollution roughly equal the costs. Our WTP estimates indicate a net welfare gain of approximately 32 billion yuan if Beijing’s lottery were replaced with an auction, which is similar to previous estimates.","PeriodicalId":45587,"journal":{"name":"Journal of Benefit-Cost Analysis","volume":"1 1","pages":""},"PeriodicalIF":3.4,"publicationDate":"2023-05-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85164586","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The generalized risk-adjusted cost-effectiveness (GRACE) analysis method modifies standard cost-effectiveness analysis (CEA), the primary method currently used worldwide to value health improvements arising from healthcare interventions. Generalizing standard CEA, GRACE allows for decreasing or even increasing returns to health. Previous presentations of GRACE have relied extensively on Taylor Series expansion methods to specify key model parameters, including those that properly adjust for illness severity and preexisting disability, consequences of uncertain treatment outcomes, and the marginal rate of substitution between life expectancy and health-related quality of life. Standard CEA cannot account for these sources of value or cost in its valuation of medical treatments. However, calculations of GRACE measures based on Taylor Series are approximations, which may be poorly behaved in some contexts. This paper provides a new approach for implementing GRACE, using exact utility functions instead of Taylor Series approximations. While any proper utility function will suffice, we illustrate with three well-known functions: constant relative risk aversion (CRRA) utility; hyperbolic absolute risk aversion (HARA) utility, of which CRRA is a special case; and expo-power (EP) utility, of which constant absolute risk aversion (CARA) is a special case. The analysis then extends from two-period to multiperiod models. We discuss methods to estimate parameters of HARA and EP functions using two different types of data, one from discrete choice experiments and the other from “happiness economics” methods. We conclude with some reflections on how this analysis might affect benefit-cost analysis studies of healthcare interventions.
{"title":"The Generalized Risk-Adjusted Cost-Effectiveness (GRACE) Model for Measuring the Value of Gains in Health: An Exact Formulation","authors":"D. Lakdawalla, C. Phelps","doi":"10.1017/bca.2023.6","DOIUrl":"https://doi.org/10.1017/bca.2023.6","url":null,"abstract":"Abstract The generalized risk-adjusted cost-effectiveness (GRACE) analysis method modifies standard cost-effectiveness analysis (CEA), the primary method currently used worldwide to value health improvements arising from healthcare interventions. Generalizing standard CEA, GRACE allows for decreasing or even increasing returns to health. Previous presentations of GRACE have relied extensively on Taylor Series expansion methods to specify key model parameters, including those that properly adjust for illness severity and preexisting disability, consequences of uncertain treatment outcomes, and the marginal rate of substitution between life expectancy and health-related quality of life. Standard CEA cannot account for these sources of value or cost in its valuation of medical treatments. However, calculations of GRACE measures based on Taylor Series are approximations, which may be poorly behaved in some contexts. This paper provides a new approach for implementing GRACE, using exact utility functions instead of Taylor Series approximations. While any proper utility function will suffice, we illustrate with three well-known functions: constant relative risk aversion (CRRA) utility; hyperbolic absolute risk aversion (HARA) utility, of which CRRA is a special case; and expo-power (EP) utility, of which constant absolute risk aversion (CARA) is a special case. The analysis then extends from two-period to multiperiod models. We discuss methods to estimate parameters of HARA and EP functions using two different types of data, one from discrete choice experiments and the other from “happiness economics” methods. We conclude with some reflections on how this analysis might affect benefit-cost analysis studies of healthcare interventions.","PeriodicalId":45587,"journal":{"name":"Journal of Benefit-Cost Analysis","volume":"59 1","pages":"44 - 67"},"PeriodicalIF":3.4,"publicationDate":"2023-04-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72525878","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The Biden administration has made equity a priority when issuing regulations, encouraging agencies to ensure that their regulations appropriately benefit and do not inappropriately burden disadvantaged groups. But scholarly examinations of agencies’ practices to date on understanding the distributional consequences of their regulations and on promoting equity have revealed significant gaps. In particular, agencies pay very little attention to the incidence of the costs of their regulations. The U.S. Environmental Protection Agency, for example, rarely considers the incidence of regulatory costs among disadvantaged groups, despite being an agency that conducts relatively complete benefit–cost analyses and explicitly analyzes environmental justice implications of its regulations. But this cost-blindness is a mistake; it presents a missed opportunity to use the current equity-focused momentum to make real improvements for disadvantaged groups that could have long-lasting effects. This essay calls for agencies to give more attention to the incidence of regulatory costs in order to identify needs and opportunities for grants and investments to disadvantaged groups. This approach could provide much-needed direction for a program like the Biden administration’s Justice40 initiative.
{"title":"An Equity Blindspot: The Incidence of Regulatory Costs","authors":"C. Cecot","doi":"10.1017/bca.2023.3","DOIUrl":"https://doi.org/10.1017/bca.2023.3","url":null,"abstract":"Abstract The Biden administration has made equity a priority when issuing regulations, encouraging agencies to ensure that their regulations appropriately benefit and do not inappropriately burden disadvantaged groups. But scholarly examinations of agencies’ practices to date on understanding the distributional consequences of their regulations and on promoting equity have revealed significant gaps. In particular, agencies pay very little attention to the incidence of the costs of their regulations. The U.S. Environmental Protection Agency, for example, rarely considers the incidence of regulatory costs among disadvantaged groups, despite being an agency that conducts relatively complete benefit–cost analyses and explicitly analyzes environmental justice implications of its regulations. But this cost-blindness is a mistake; it presents a missed opportunity to use the current equity-focused momentum to make real improvements for disadvantaged groups that could have long-lasting effects. This essay calls for agencies to give more attention to the incidence of regulatory costs in order to identify needs and opportunities for grants and investments to disadvantaged groups. This approach could provide much-needed direction for a program like the Biden administration’s Justice40 initiative.","PeriodicalId":45587,"journal":{"name":"Journal of Benefit-Cost Analysis","volume":"24 1","pages":"35 - 43"},"PeriodicalIF":3.4,"publicationDate":"2023-03-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81275994","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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