Abstract
Behavioural economists often claim that their policy recommendations are justified by cost-benefit analysis (CBA), but without adequate explanation of the methodology they have in mind. I sketch the outlines of a CBA methodology that is compatible with the findings of behavioural economics and is in accord with my account in Sugden (2018) of a well-functioning market as a network of opportunities for mutually beneficial transactions. The key idea is that the CBA of a project is concerned only with effects that are not transmitted through voluntary interactions. I illustrate this proposal by considering the appraisal of fuel economy mandates.
Original language | English |
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Pages (from-to) | 954-962 |
Number of pages | 9 |
Journal | Behavioural Public Policy |
Volume | 7 |
Issue number | 4 |
Early online date | 27 Feb 2023 |
DOIs | |
Publication status | Published - Oct 2023 |
Keywords
- cost-benefit analysis
- behavioural economics
- voluntary interaction
- regularisation
- fuel economy mandate
- voluntariness
- fuel economy mandates