In a paper titled 'the discipline of Cost Benefit Analysis' published some 25 years ago, Amartya Sen says
Perhaps it is appropriate to see the demand of explicit valuation as the first general condition imposed by the discipline.
This is a forceful demand for fuller articulation, which involves the rejection of a commonly adopted position hallowed by tradition, to wit, that we may know what is right without knowing why it is right.
Nonsense! CBA doesn't question the value of anything anymore than Accountancy concerns itself with whether having more money is good for the soul.
At the risk of oversimplification, explicit valuation is a part of the insistence on a rationalist approach, which demands full explication of the reasons for taking a decision, rather than relying on an unreasoned conviction or on an implicitly derived conclusion.
This simply isn't true. CBA is just a type of Accountancy which Governments or Clubs or other organizations solving 'collective action problems' use. If the Government is doing the investing, it can weigh up the future tax gain from the project and see if it has higher present value than the outlay. If the return is negative there may be 'Ricardian equivalence' or crowding out such that its future spending has to be curtailed. If you piss your money away today, you may have less money tomorrow.
Despite its rationalist appeal, explicit valuation as a principle is not without its problems.
They are the sort of problems Accountants deal with every day. Sometimes, you piss away money because, fuck it!, if you didn't, your wife would. Thus a Government department may prefer to spend its whole budget rather than return money to the Exchequer who may give it to some rival department to piss away.
If one were to insist on this in all personal decisions, life would be quite unbearably complicated.
Not really. Tardean mimetics provides a simple rule- do what the smart kids are doing.
The making of day-to-day decisions would, then, take more time than would be available for it, and decisional defenses might look terribly pedantic (perhaps even pompous, in much the same way the wine experts’ specialist recommendations tend to sound, invoking such notions as the wine’s ‘‘melodic quality’’ or ‘‘big nose’’ or ‘‘innate cheerfulness’’).
Nope. You just say 'I'm doing what the smart peeps are doing. Fuck off.'
However, public decisions have more need for explicitness than private choices or personal actions.
In a Democracy- maybe.
Others not involved in the decision may legitimately want to know why exactly something—rather than another—is being chosen.
But, they may, equally legitimately, be told to fuck off by the Party with the big majority.
The demands of accountability apply not merely to implementation but also to choices of projects and programs. There is, thus, a case for fuller articulation and more explicit valuation in public decisions than in private ones.
There may be, but the Party with the big majority may prevent any such articulation.
Here too there may be problems. What Cass Sunstein calls ‘‘incompletely theorized agreements’’ may be quite important for agreed public decisions.
Boondoggle or bribes may be involved. But that has nothing to do with CBA which is generally farmed off to a retired Judge and some underemployed economists.
A consensus on public decisions may flourish so long as the exact grounds for that accord are not very precisely articulated. Explicit valuation may, thus, have its problems in public decisions as well as private ones.
The thing may be corrupt or pro forma. Sen himself came to realize that all the 'project appraisal' he and his pals in India were doing was bunkum. What mattered was whether the contractor had bribed the Minister sufficiently.
There is, nevertheless, a case for explicitness, if only to encourage the possibility of reasoned consent and to present some kind of a barrier against implicit railroading of unacceptable decisions that would be widely rejected if properly articulated.
The problem here is that even a Madoff can get some external Auditor to sign off on his fraudulent accounts. Similarly, you can hire guys to give you the CBA you want.
There are several conflicting issues of pragmatic concern as well as analytical clarity in the insistence on explicit valuation, but judged as a technique of analysis (as opposed to rhetoric of advocacy) this insistence does have some very basic merit.
Nope. Accountancy is only as good as the Accountant doing it.
Also, diverse grounds for agreement on a particular policy judgment can be accommodated within a general approach of relying on the intersection of partly divergent rankings over policy alternatives.
Nonsense! The only way to get a decisive coalition is through side-payments- i.e. boondoggle or pork barrel politics. 'Transferable utility' is what gets rid of all Social Choice problems.
B. Broadly Consequential EvaluationA second basic principle of cost-benefit analysis relates to the use of consequential evaluation.
No. Like Accountancy, CBA has to respect the pre-existing rule-set. It can only look at permissible or inter vires actions. It is fundamentally deontological. However, its findings can be rejected for consequentialist reasons. Thus the CFO may say 'we will be bankrupt by the Third Quarter'. The CEO then says 'we have no choice but to raid the pension fund'. The CFO turns white and the Legal adviser has kittens but the CEO reminds them that if they don't break the law, they will end up in the Poor House. Anyway, some of those White Collar prisons are more like country clubs- right?
Costs and benefits are evaluated, in this approach, by looking at the consequences of the respective decisions.
No. They are evaluated by extrapolation. We don't know the consequences of our decisions. We can only make estimates. One reason we might do something even if CBA says we shouldn't is because that's what smart peeps are doing. Maybe they have better forecasting techniques.
Broadly consequential evaluation allows the relevant consequences to include not only such things as happiness or the fulfillment of desire on which utilitarians tend to concentrate, but also whether certain actions have been performed or particular rights have been violated.
Thus it is as much 'broadly deontological' as it is 'broadly consequentialist'. In actual fact, however, CBA is procedural not substantive.
This inclusiveness is resisted by some. Since consequentialist thinking has been very closely linked with utilitarianism and related approaches, there is a long tradition of taking a very narrow view of what can count as consequences (roughly in line with what utilitarians wish to focus on).
CBA is just a glorified type of Accountancy. You get paid a little money for doing it. If you don't say what your employer wants you to say, he won't hire you next time around. This has nothing to do with some stupid philosophy taught by imbeciles to dudes who just want to get a white collar job.
As a result, many political theorists
i.e. shitheads teaching shit to guys who wish they had been smart enough to get into Medical Skool
have argued against taking an inclusive view of consequentialism. It has been claimed, for example, that a performed action cannot be included among the consequences of that action.
Farting causes a bad smell to permeate the air in the room. It is not the case that a fart is the consequence of itself.
But one has to be quite a pure theorist to escape the elementary thoughtthat an action that has been successfully undertaken must have resulted inthat action’s occurrence,
Sen's farts move backward in time so as to cause their own occurrence. That's why they gave him a Nobel Prize.
no matter what other consequences it may or may not have (the main argument against asserting this may be the difficulty in stating something quite so obvious, without sounding rather foolish).
It is obvious that Sen's fart are tachyonic and thus travel faster than light. This isn't a foolish thing to say at all.
Similarly, if recognized rights are violated by particular actions (for ex-ample, by the jailing of dissidents), there is no great difficulty in seeing thatthese actions have resulted in the violation of those rights.
If dissidents are jailed by due process of law, there is no fucking rights violation. We may say 'the laws should be changed' but until those laws are changed no 'recognized right' was violated.
We do not even face a tremendous intellectual challenge in understanding such statementsas, ‘‘1976 was a very bad year for civil rights in India, since there were many violations of civil rights as a consequence of policies that were followed during the so-called ‘Emergency period.’ ’
This silly man does not understand that once Emergency was declared, there were no fucking civil rights. Once Indira lifted Emergency she released 'dissidents' unless- like George Fernandes- they were facing other criminal charges.
’ The vast majority of the Indian voters who defeated the proposed continuation of the Emergency
there was no such proposal. Indira lifted the Emergency- probably because she was worried that Sanju's chums would arrange a nice little 'accident' for her.
(as well as the government that had imposed it) did not have to manage without consequential reasoning.
Sadly, they didn't understand the consequences of voting for nutters like Raj Narain. Indira soon returned as India's openly dynastic Empress.
Indeed, looking at consequences on rights and freedoms—though allegedly alien to rights-based reasoning in some modern political theories—is not really a new departure, as anyone studying Tom Paine’s Rights of Man or Mary Wollstonecraft’s The Vindication of the Rights of Women (both published in 1792) can readily check.
This cretin doesn't get that Paine and Wollstonecraft knew that the rights and freedoms they wanted did not yet exist in England. Paine also managed to piss of the Americans by saying rude things about Washington.
Taking a broad view of consequential evaluation does not, however,make it nonassertive.
Because, like Sen's farts, it causes itself to assert itself- right?
It wrestles against deciding on actions on grounds of their ‘‘rightness’’—irrespective of their consequences.
No. It may decide that the consequences of doing the right thing are gained in the next life or in Heaven or in having inscribed one's name, in letters of imperishable flame, in the Book of all those who sacrificed Life and Limb in the cause of the fart which is its own consequence.
This is a debate that has gone on for a long time and remains active today.
Because maybe there is something better than Life to which death is the gateway.
Those opposed to consequential evaluation—even in its broadest form—have shared a common rejection of being guided by consequences (the ‘‘right’’ action may bedetermined, in this view, simply by one’s ‘‘duty’’—irrespective of consequences).
Which is cool if you believe in Karma or Christ or the fart which farts itself.
But they have often argued for very different substantive positions on deontological grounds. For example, Mahatma Gandhi’s deontological insistence on nonviolence irrespective of consequences
Russell was more of a pacifist. Gandhi recruited soldiers in the First war. He thought the Japs would win in the Second and thus thought it smart to sulk in jail. Anyway, Gandhi believed in karma. If you are a Gandhian you will get to be reborn on a paradisal planet where there is no sex or dirty pictures and everybody lives for ten billion years.
clashes substantially with Krishna’s deontological advocacy, in Bhagavadgeeta, of the epic hero Arjuna’s duty to take part in a just war.
Krishna reveals that he is the only efficient cause in an Occassionalist universe. He has a plan- sadly this involves the killing of some nice guys- like Ghatotkacha.
On the eve of the great battle, as Arjuna rebels against fighting (on the grounds that many people will be killed on both sides, that many of them are people for whom Arjuna has affection and respect, and, furthermore, that he himself—as the leading warrior on his side—would have to do a lot of killing),
Actually, Arjuna rebels because he has an unvested boon of clairvoyance. This leads to the outcome he wants- viz. to gain theophany as Krishna's gratuitous gift.
Krishna points to Arjuna’s duty to fight, irrespective of his evaluation of the consequences.
No. He, as Yogishvara, grants Arjuna the theophany he seeks.
It is a just cause, and as a warrior and a general on whom his sidemust rely, Arjuna cannot, in Krishna’s view, waver from his obligations.
Sure he can. Hindus know that Krishna himself is known as Ranchodharai because he fled the battlefield. His elder brother too says 'sod this for a game for soldiers' and leaves the battlefield with a bit pot of wine.
Krishna’s high deontology has been deeply influential in Indian moral debates in the subsequent millennia.
No. It is the theophany of 'Yogishvara' which was important. Essentially, Krishna makes Samkhya/Yoga theistic and introduces an Occassionalist metaphysics.
It is also eloquently endorsed, among others, by T. S. Eliot, in a poem in the Four Quartets. Eliot summarizes Krishna’s view in the form of an admonishment: ‘‘And do not think of the fruit of action. / Fare forward.’’ Eliot explains: ‘‘Not fare well, / But fare forward, voyagers.’’
Eliot was wrong. Krishna's message was joyful. Had Eliot lived a few years longer he would have seen plenty of Hare Krishna dudes dancing around on the streets of London.
Cost-benefit analysis, on the other hand, suggests that we try to ‘‘fare well’’ and not just ‘‘forward.’’
No. It is like Cost and Management Accountancy. It doesn't try to give any suggestions. It simply seeks to get paid a little money for doing a boring job.
The ‘‘wellness’’ that results must take note inter alia of the badness of violation of rights and duties (if such things are admitted into consideration),
Nonsense! Accountants have to look at inter vires scenarios.
but the decision cannot be reduced just to doing one’s ‘‘duty, irrespective of consequences.’’
Yes it can. If you are doing CBA and tell the truth as you see it, though you may be sacked, there could be a reputational benefit.
It should, thus, be clear that consequential evaluation as a principle does impose a demand with some cutting power.
If you are asked to analyze the consequences of an action, you are doing consequential evaluation. However, to have 'cutting power' some further demand must be made- e.g. restrict yourself to financial consequences. Don't gas on about farts which fart themselves.
I would argue that the principle does make good sense, but I know that deontologists would not agree and would, no doubt, decide that they have overwhelming reasons to reject that approach (the world is full of ‘‘very strange and well-bred’’ things, to use William Congreve’s perplexed phrase).
Did Sen have a stroke? Congreve's play features a lady who will only agree to marry a particular dude if he doesn't kiss her in public or expect her to dine with his imbecilic family. A deontologist would agree that a guy hired to do a particular job, should do that fucking job because that is his fucking duty. True, if he had stipulated that he wouldn't do the job in a sensible way, then, if his work-product is shit, we can't say he was derelict in his duty.
The world of costs and benefits (which includes taking note of the badness of nasty actions and of violation of freedoms and rights)
there is no such 'taking note'. CBA, like Cost and Management Accountancy looks only at inter vires actions. If there is a doubt in this matter, it is referred to a lawyer.
is quite a different decisional universe from the sledgehammer reasoning of consequence-independent duties and obligations.
Not if those duties and obligations include having a prudent regard to the likely consequences of one's actions.
C. Additive Accounting
Cost-benefit analysis not only bases decisions on costs and benefits, it also looks for the value of net benefits after deducting costs from benefits.
The present value of net benefits. The question is which rate of discount it should use.
While benefits can be of different kinds and are put together—to the extent that they can be—through a selection of weights (or ranges of weights), costs are seen as forgone benefits. Thus, benefits and costs are defined, ultimately, in the same ‘‘space.’’
This is a fallacy. Sometimes you have two compare two states of the world- e.g. having or not having an international airport. The costs may outweigh the benefits, but, sooner or later, not having that airport means you lose out to a rival city. Mathematically, we say that there are two different configuration spaces though, no doubt, there was a partition event.
The additive form is implicit in all this. When different kinds of benefits are added together, with appropriate weights, the framework is clearly one of addition. It may be wondered whether there is anything to discuss here, since many people are so exclusively familiar with the additive form of reasoning (compared with all other possible forms) that addition may appear to be simply the natural form—perhaps even the only form—for getting together diverse benefits and costs. However, multiplicative forms have also
been used in the evaluative literature (for example, by J. F. Nash in what he called ‘‘the bargaining problem’’). Other forms are possible too.
They are all irrelevant. For some purposes there is a connected configuration space, not so for others. You have to compare two different states of the world at some future point without there being any incremental method to get to one from the other.
Assuming convexity makes things mathematically tractable, but policy makers have to compare 'unconnected' states of the world. If there is a 'connected path', you probably don't need CBA. Mechanism design will do the trick. There is an incremental method to get the big international airport you need so as to remain competitive. Sadly, many collective action problems aren't of that type.
In fact, there is a strong case for using concave functions that respond positively to benefits (and thus negatively to costs) but do not have constant weights and a linear format.
In which case there is no big collective action problem. Mechanism design- i.e. changing the incentive mix- will get us there though the operation of the market.
In fact, concavity is very often the most plausible shape of an objective function involving different good things and has been used to derive variable weights at different points and correspondingly variable shadow prices of resources (for example, through use of the so-called Kuhn-Tucker Theorem).
Only if 'regularity conditions' are met- but if there are there is no big collective action problem.
In fact, in general we would expect some strict concavity (or at least strict quasi concavity, corresponding to diminishing marginal rates of substitution between different kinds of benefits), and in this sense, the additive form of cost-benefit analysis requires careful handling.
Which is why few monkeys are used in this line of work. Still, if regularity conditions obtain, why do CBA? Leave the thing to the market. I suppose the first international airports evolved through private enterprise. But, at some point, when it came to expanding them, the Government had to get involved. That's when CBA came into its own though, no doubt, the fix was in. People understood that not having the big airport might fuck them in the ass sometime in the future.
One way of dealing with the problem is to confine attention to relatively marginal changes, so that the weights may not change very much and the framework may be approximately linear (some would refer to Taylor’s Theorem and to local approximations, at this point).
So this is fine for small stuff like deciding whether or not to let the local supermarket set up a bigger parking lot. But CBA has to deal with big 'lumpy' investments. We have to compare states of the world with no 'connected path' between them.
But many projects are relatively large, and the benefits may be so particularized (especially in a distribution-sensitive accounting) that the weights may have to change quite readily. In that case, there is no alternative—if one were to use the additive form of cost-benefit analysis—to taking note of the need for varying weights as the magnitudes of different kinds of benefits change.
This is called fudging the numbers. Some people may be paid a little money to do it. But, people understand that they must compare two very different states of the world. They have to think strategically. This is where Tardean mimetics comes in. It is regret minimizing to do what the smart peeps are doing. True, there may be a crash- e.g. lots of underused International airports built during the boom- but, as the Persians say, in a general calamity everybody is merry.
The exercise must then take the form of a conjoint determination of quantities of benefits and their weights. I shall not go further into the technicalities here, but it is important to recognize that the additive form that cost-benefit analysis adopts is chosen at the cost of some limitation and certainly calls for more simultaneous reasoning of quantities and values as substantial alterations are considered.
One way to check if CBA is on the right track is to see if you can securitize the underlying asset and flog it on the market. That way the risk is spread.
Even with all these qualifications (explicit valuation, broadly consequential reasoning, and additive accounting), general cost-benefit analysis is a very ecumenical approach.
Just like Accountancy.
It is compatible, for example, with weights based on willingness to pay as well as some quite different ways of valuation (for example, through questionnaires), which may supplement or supplant that willingness-to-pay framework.
The problem is that a small minority of very vocal activists can sink worthwhile projects. There is also the NIMBY problem. Ultimately, settling for what harms the poorest is the way to go because those cunts already have miserable lives. They will get the message that they should move elsewhere or just stop being so fucking poor.
There is reasoning here of great generality (despite the qualifications and disclaimers already considered) and it is important to see the reach of the general approach before we go on—from this point onward—to adding more and more restrictive requirements that make the procedures more specific and particular, at the cost of reducing the wide freedom given by the general approach of taking decisions by cost-benefit reasoning.
Sen has misunderstood the basic 'collective action problem' that CBA must take in its stride. Now he will add restrictions so as to make it utterly worthless. Around the time he was writing this, the activists were forcing the World Bank to stop doing infrastructure investment in India. This was good news for the Ambanis and Adanis.
IV. Structural Demands
A. Assumed Completeness
These cretins assume there is no Knightian Uncertainty- i.e. all possible states of the world are known as is their probability. Yet, such is not the case. This is why Tardean mimetics and regret minimization are the roads we actually take.
As it is standardly practiced, cost-benefit analysis tends to invoke completeness of evaluations.
No. There may be some attempt to do so, but it is window dressing. People are aware that the future will surprise us in many ways. To be on the safe side, do what smart peeps are doing till you discover you are as stupid as shit. Then trying doing what the not quite as stupid as shit dudes are doing.
This requires not only that each consequence be identified and known (more on this presently) but also that the weights, at the appropriate point, are definitive and unique.
This is easily done by arbitrary stipulation.
It is often presumed, without any explicit argument, that if we are evaluating benefits and costs, then every possible state of affairs must be comparable—and be clearly ranked—vis-a`-vis every other.
See above.
This presumed requirement has sometimes been seen by critics of cost-benefit analysis as being quite implausible.
Why? Any nutter can pull an arbitrary stipulation out of his arse. So can you. But who is to say yours is better?
How can we always compare every alternative with every other, especially since so many considerations are involved, which incorporate imprecise measurement and ambiguous valuation? Can we always find a best alternative?
We can say we do and threaten to fart in the face of anyone who calls us a liar.
What if we fail to rank some states of affairs vis-a`-vis others?
Cats will sodomize dogs.
Some see completeness as a necessary requirement of consequential evaluation, but it is, of course, nothing of the sort.
It is necessary of that 'Platonic' evaluation which you are approximating. If this is not the case, then you are not doing 'consequential evaluation' but something else- viz 'comparative evaluation'.
A consequentialist approach does involve the use of maximizing logic in a general form, but maximization does not require that all alternatives be comparable
suppose there is an alternative which is not comparable. Then it has no opportunity cost. But, if so, it is not really an alternative at all.
and does not even require that a best alternative be identifiable.
It is identifiable as an 'intension'. It's just that we don't know what the extension of that intension is. But we may have a 'good enough' approximation. That is all we are doing- approximating.
Maximization only requires that we do not choose an alternative that is worse than another that can be chosen instead.
In which case, all alternatives have an opportunity cost- i.e. are comparable.
If we cannot compare and rank two alternatives, then choosing either from that pair will fully satisfy the requirement of maximization.
Nope. It is simply an arbitrary action which does not satisfy shit.
The term maximization is often used quite loosely, rather than in its mathematically well-defined form.
That relates only to mathematical functions. However, because of the 'intensional fallacy', there are no such functions in Econ. We might say that there is approximation to a function for some purpose. Or we might simply admit that mathematical econ is stupid shit.
Sometimes the term is used to indicate that we must choose a best alternative. This is, technically, better described as optimization.
In Math, Optimization theory includes both maximization and minimization.
The technical definition of maximization in the foundational literature on set theory and analysis (in the form of picking an alternative to which there is none better) captures all that needs to be captured for being able to choose systematically and cogently through pairwise comparisons.
Only if there is an objective function. But that must be non-arbitrary. Sadly, in Econ we mainly see correlation not causation. Only if we have the correct 'Structural Causal Model' can we get to a non-arbitrary objective function. Still, for any particular purpose, an arbitrary approximation is good enough to be getting along with.
Maximization and optimization coincide if the ordering is complete, which it may or may not be. If, for example, it so happens that
(1) there are two options A and B that cannot be ranked vis-a`-vis each other, but
(2) each of them is better than all the other alternatives, then maximization would require that one of those two—A or B—be chosen.
No. It would require further research to determine if one might not be better than the other for some particular pressing purpose.
The distinction can be illustrated with the old story of Buridan’s ass,which saw two haystacks that it could not rank vis-a`-vis each other.
It was equidistant between two identical hay-stacks.
Buridan’s ass, as a vigorous optimizer and a great believer in complete orderings, could not choose either haystack (since neither was shown to be clearly the best), and it thus died of starvation. It starved to death since it could not rank the two haystacks, but of course each would have generated a better consequence than starvation. Even if the donkey failed to rank the two haystacks, it would have made sense—good cost-benefit sense—for it to choose either rather than neither.
Asses have evolved over hundreds of thousands of years. An ethologist might study a number of such asses and give an explanation for why asses, statistically speaking, choose one bundle over another. This may have to do with signals in the terrain which correlate to the presence of predators or else have something to do with the animal's physiognomy or neural wiring.
Cost-benefit analysis does need maximization, but not completeness or optimization.
It needs approximation and the ability to visualize two different states of the world which can't be incrementally connected. Ultimately, the decision may be made on the basis of Tardean mimetics- or bribes or the need to placate some vested or very vocal interest group.
When a particular exercise of cost-benefit analysis ends up with a complete ordering and a clearly optimal outcome (or an optimal set of outcomes), then that may be fine and good.
This can be done arbitrarily.
But if that does not happen, and the valuational ordering is incomplete, then maximization with respect to that incomplete ranking is the natural way to proceed.
Sen forgets that CBA, like Accountancy, is done by people hired for the job. The decision will reflect the preferences of the guy paying their salary.
This may yield several maximal solutions that are not comparable with each other, and it would make sense to choose one of them.
Hire three or four economists to do appraisal of the same project and you are likely to get three different answers. Chose the one which suits you.
If the valuations come in the form of ranges of weights, we can also do sensitivity analysis of the effect of reducing the ranges of variations on extending the generated partial ordering.
In other words, once someone has fudged the numbers, you can go back and fudge them again. This was a cottage industry amongst Welfare Economists. One guy would say 'Poverty has increased by ten percent under the Tories' and then another would re-fudge his fudged numbers to prove that everybody in Thatcher's Britain starved to death in 1983.
The extent of imprecision can be reflected in the assessment, and the choices can be systematically linked to the valuational ambiguities.
Better yet, you can look at the Swiss Bank Account of the Minister or the Principal Secretary to the Ministry and find out who paid him off and with how much money.
However, in the literature, completeness is sometimes insisted on, which tends to produce arbitrary completion in terms of imperious valuational judgments or capricious epistemic assessments. The result often enough is to ignore the less exactly measured consequences or less clearly agreed values, even though they may be extremely important (of which we can be sure even without zeroing in on an exact weight—the entire range of acceptable valuational weights may speak clearly enough).
Alternatively, one can take Sen's route which is to say that before deciding what we should decide to decide we must first consult impartial spectators from the Planet Neptune.
The neglect of the so-called human costs relates partly to this despotic quest for complete orderings.
Other economists are very evil. Their own wives and children starve to death while they engage in despotic quests. Impartial observers from Planet Neptune are shocked by such behavior.
These are cases in which a little more sophistication in the technical exercise can allow us to include many variables that some technocrats find too messy to incorporate.
this should include the impact on the capabilities of Lesbian goats in Nicaragua who wish to consult impartial spectators on the Planet Neptune.
B. Full Knowledge or Probabilistic UnderstandingThe presumption of full knowledge of the consequences involved is rather similar to that of complete availability of definitive and precise valuational weights.
There is no such presumption. We are only concerned with good enough approximations.
It is relevant to see the sources of epistemic ambiguity and their far-reaching effects.
Nope. It is enough to understand that forecasts are merely guesses supported by some time-series data.
No less importantly, there is a need to consider ranges of values of factual variables (like that used for evaluative weights),which lead mathematically to similarly partial orderings of alternative proposals (on the basis of intersection of all the total orderings compatible with each set of values within the respective ranges).
No. We know that the numbers could be fudged any which way.
Again, the discipline of maximization provides a much fuller reach than the usual insistence on optimization.
But it can't grasp anything real. It is merely window dressing.
It is sometimes presumed that the problem can be avoided by looking at expected values, with probability-weighted valuations.
D'uh! What is the alternative?
Indeed, this can often work well enough. However, for it to make sense, the choice of probability weights needs justification,
by frequentist means. On the other hand, if there is no data we say 'your guess is as good as mine'- i.e. the maximum uncertainty principle operates.
as does the axiomatically demanding framework of expected value reasoning.
Perhaps Sen means Bayesian reasoning converging to stuff out of machine learning or 'Hannan consistency'.
These issues have been extensively discussed elsewhere, and I shall not go further into them here.
By the time Sen was writing this, 'big data' was being used to make billions for Quants who were using their PhDs to some good purpose rather than poncing around pretending to be Mother Theresa in drag.
C. Noniterative and Nonparametric Valuations
i.e. saying 'I like x' or 'x stinks!'
Valuational judgments we make can take various forms.
Sen's are always stupid.
One distinction relates to judgments that are basic in the sense that they are not parasitic on any underlying factual presumption (other than those which are part of the subject matter of the judgment itself).
Such a judgment would be 'an atomic proposition'. None exist.
Nonbasic judgments may, however, draw on factual presumptions,
e.g. I am not a cat. Cats don't blog.
often made in an implicit way, and thus remain subject to revision in the light of more knowledge—indeed even in the light of the results of applying these nonbasic judgments themselves.
Defeasibility is the essence of any judgment.
When dealing with nonbasic judgments,
there are no basic ones
say, in valuational weights, we have to be aware that the valuational priorities may undergo alteration as the implications of the presumed weights become more fully known or understood.
This is relevant for management of a production process. It is not relevant for CBA.
For example, we may not fully seize the implications of choosing one set of values over another, until we see the results of using that set of values.
We would only see this if we are managing the process. CBA is something you buy in.
This suggests the need for iterative exercises of valuation, for example, through the procedure of parametric programming.
Which is only used in control theory and process manufacturing.
Rather than taking the weights given as unalterable entities, they could be offered as tentative values, which remain open to revision as and when the results of using those values become clear.
This is what managers do. It isn't what you buy in CBA for. Project appraisal demands a different skillset and has to be 'one-off'.
Then, instead of having a one-way sequence of valuation, we could proceed from tentative values to the applied results and then rethink as to whether the weights need revising in the light of the generated rankings of alternatives.
This means having to keep the CBA team on staff permanently. But then they are merely second guessing Management. Why stop there? Why not hire evaluation evaluators to second guess the second guessers? Indeed, why not give everybody a job evaluating the evaluations done by their own evaluators?
In some cases we have clearer values on particular elements in the list of benefits than we have on overall assessments of total happenings.
This happens in all cases.
In other cases, however, the overall assessments may speak more immediately to us, in terms of the valuations that we may entertain.
Which is why CBA can't be as Sen says it is.
Examples are easy to give of both kinds of judgments from the recent literature on contingent valuation as applied to environmental interventions.
Nonsense! Which 'overall assessment' has this quality? None at all. This is because you can't assess what doesn't exist. You can only evaluate a model under a particular contingency. But models are approximate.
The format of cost-benefit analysis allows iterative valuation and parametric techniques,
in which case they represent production process management not CBA
even though the mainstream applications go relentlessly in one direction only.
Similarly, a surgery is a one off event though, no doubt, you could train as a surgeon and keep operating on your own tumors.
Again, the pragmatic convenience of suppressing iterative determination of weights
because is not very convenient to have to give office space to a whole bunch of CBA guys busy second guessing the management team
has to be balanced against the practical importance of two-way in-fluences on the nature of elementary valuations and their integrated effects.
Just hire smart managers.
V. Evaluative IndifferencesA. Nonvaluation of Actions, Motives, and RightsIn the context of discussing broad consequential evaluation, there was already an opportunity of commenting on the inclusiveness of consequential reasoning, such as taking note of the nature of actions and the fulfillment and violation of recognized rights
Recognized rights are legal rights. Hire a lawyer to advise your CBA team.
. Motives too can come into the accounting, even though they are more important in personal decisions than in public choice.
No. Motives don't come into accounting. They come into Management.
The neglect of these considerations in mainstream cost-benefit analysis does reduce the reach of the ethical analysis underlying public decisions.
Because CBA isn't 'ethical analysis'. Sen may be surprised to learn that the guy who does your taxes can't certify that you are of a saintly character or that you are a great lover. That isn't what he was trained to do.
The literature on human rights brings out how strongly relevant—and closely related—some of these concerns are to what people see as important.
I suppose Sen means that some want legislation recognizing all sorts of new 'human rights' so as to reduce what Governments and enterprises can do.
These concerns remain potentially pertinent to cost-benefit evaluation even when people have no opportunity of expressing their valuations of these concerns in limited models of cost-benefit assessment (for example, in terms of market-price-based evaluations).
The Government can pass a lot of laws essentially criminalizing all manners of economic activity. This does not mean they will disappear. It is just that those doing them will be gangsters who shoot you rather than let you take them to court.
B. Indifference to Intrinsic Value of FreedomThe neglect of the freedoms that people enjoy is no less serious a limitation than the neglect of rights.
Only in the sense that the neglect of the capabilities of Lesbian goats in Nicaragua imposes serious limitations on their interactions with impartial observers on the Planet Neptune.
Indeed, recognized rights often tend to take the form of claims on others for compliance—or even help—in favor of the realization of the freedoms or liberties of the persons involved.
Rights are meaningless unless they are linked to remedies to be provided by obligation holders under a bond of law. But, if this is not 'incentive compatible', those claims will be ignored.
These entitlements may take the form of cospecified perfect obligations of particular individuals or agencies, or—more standardly in the case of many of the claims of human rights—imperfect obligations of people or agencies who are generally in a position to help.
Both may be ignored. Indeed, there is likely to be a rationing of remedies if not their total disappearance.
It is possible for consequential cost-benefit analysis to take note of the substantive freedoms that people have (formally this will require valuation of opportunity sets, and not merely of the chosen alternatives).
Nobody knows what 'substantive freedom' they have. They may be hit by a bus crossing the road later today.
This can be an important distinction. For example, a person who voluntarily fasts (rather than involuntarily starves) is rejecting the option of eating, but to eliminate the option of eating would make nonsense of the voluntariness of his choice.
Not if he doesn't know it.
Fasting is quintessentially an act of choosing to starve, and the elimination of the option of eating robs the person of the opportunity of choice that makes sense of the ‘‘sacrifice’’ involved in fasting.
The Government can mandate forcible feeding- by sticking a pipe down the person's throat- as they did with the Suffragettes. That would eliminate the option of starving to death.
The case for consequential analysis based on comprehensive outcomes (taking note of processes used and freedoms exercised, as opposed to merely culmination outcomes)
is a case for wasting everybody's time by doing useless shit.
closely relates to this question and to the extensive reach of consequential reasoning.
Nope. It is useless. Why not also take note of the processes used and freedoms exercised when taking note of the processes used and freedoms exercised while taking note of farts that fart themselves?
Insofar as the restricted format of mainstream cost-benefit analysis neglects the importance of freedom,
because it counts ten dollars going into the pocket of Mr X as ten dollars plus the freedom to spend ten dollars plus the freedom to have the freedom to spend dollars plus the freedom to have the freedom to have that freedom and so on ad infinitum.
there is a manifest limitation here, and the contrast with a more general consequential approach is clear enough.
Because the more general consequential approach would take account of the capability to have the capability to have the capability to have the freedom to have the freedom etc.
On the other hand, the practical convenience of allowing that neglect may be very easy to see. It is not crucial that we agree on what exactly is to be done (whether to go for the more inclusive but more difficult approach, or the opposite), but it is quite important to see what the debate is about (and indeed that there is a debate here to be faced, which many exponents of the limited mainstream methodology seem rather reluctant to acknowledge).
There is no debate to be faced here. When embarking on a big public project, it makes sense to hire guys to do CBA. Add a legal adviser to ensure everything is inter vires. Then see if there's enough money in the kitty to proceed. That's it. That's the whole story.
C. Instrumental View of Behavioral ValuesValues influence our actions, and in assessing the consequences of public projects, valuational assumptions are standardly made.
How much will it cost and what is the expected tax yield from doing it? Focus on that and you won't go far wrong.
But it is also the case that substantial projects, particularly those involving cultural challenges and also movements of people from one cultural setting to another(for example, from rural to urban areas), may tend to lead to modification of values. This opens up a big issue as to how such value modifications are to be assessed and, in particular, in terms of which values—the prior or the posterior beliefs—the evaluation should occur.
No. Either there is low productivity or involution in Agriculture or those guys won't shift. Equally, they will shift even if you don't plan on their moving to the cities.
The issue, though enormously complicated,
It isn't complicated unless you make it so
has received attention from some social analysts.
i.e. shitheads
I do not have a great solution to offer here,
Sen doesn't have solutions for anything.
but if a serious problem is neglected—
or tackled by a seriously stupid shithead like Sen
even if for the excellent reason of our not knowing how to go about dealing with it—it is right that the neglect should be flagged.
No it isn't. There is no point flagging serious problems unless they can be solved. Death is a serious problem. But flagging it aint gonna make us immortal.
It may conceivably turn out to be rather relevant in our decisional analysis, even if only for the reason that it may make us more modest about insisting on the unquestionable excellence of the advocated decisions.
What would be the point of that? Suppose we've spent ten billion dollars so as to host the Olympics. We want the guy in charge to be saying 'we've made a fucking excellent decision! Our City will prosper as never before!' We don't want the dude to become modest and say 'it may turn out okay. On the other hand, the thing could be a complete shit-show.'
VI. Market-Centered ValuationA. Reliance on Willingness to PayIn mainstream cost-benefit analysis, the primary work of valuation is done by the use of willingness to pay.
Mainstream CBA is paid for by the guy willing to pay for the project or else by people who want to stop the thing from happening and are willing to spend some cash on CBA for that purpose.
This approach is, of course, based on the rationale of the discipline of market valuation.
No. CBA can be done in a command economy or in non-market sectors of market economies. Should we build more submarines or more aircraft?
Indeed, the use of valuations based on a market analogy
if you don't have market prices, use 'shadow prices'.
has some of the merits that the market allocation system itself has, including sensitivity to individual preferences and tractability of relative weights.
In the market, 'weights' are endogenous rather than arbitrarily imposed.
The basic limitations of this approach include those experienced also by market signaling. There is, for example, the neglect of distributional issues,
why? You can give a higher weighting to the poor
both (1) in the form of attaching the same weight on everyone’s dollars (irrespective of the poverty or the opulence of the persons involved), and
Sen is taking a dig at 'Hicks-Kaldor' improvements but CBA can easily adjust weights- more particularly in a Democracy where poor people have more voting power.
(2) in the shape of not attaching any weight to distributional changes resulting from the project or program (since those changes, even if valued positively or negatively by the citizens, are not up for valuation as a private good in the market system).
In a democracy, you can put a money value to the distributional change- e.g. we would have to spend x amount more in party propaganda and election expenses if we want to stay in power after implementing this project because of its distributional effects.
There are also signaling difficulties when there are interdependences and externalities.
Which is why you shouldn't entrust project appraisal to gobshites like Sen.
In addition to shared problems of (i) the actual market system and (ii) market analogy valuation, the latter has some additional problems as well.
The basic problem is the same. You have to hire smart peeps.
This applies particularly to public goods, where valuations based on market analogy have often been invoked. Getting people to reveal what they are really willing to pay is not all that easy,
We don't know what we would be willing to pay because of Knightian uncertainty. I recall deciding not to join a Gym when I was 35. I thought I was saving myself some money. I now realize the Gym membership would have been cheap and double the price. On the other hand, I was willing to pay for a lot of pizza and beer which I now wish I had not consumed.
when the question is not followed by an actual demand for that payment.
That does not get rid of the preference revelation problem.
And when it is so followed, there are also strategic considerations that may distort the revealed willingness to pay, for various reasons, of which free riding is perhaps the most well known. There are, of course, proposed devices to deal with incentive compatibility in implementation, but no general surefire method has emerged.
In other words, academic economics has made zero progress in this area. By contrast, auction design has improved.
Estimation of willingness to pay is particularly hard in the case of contingent valuation of existence values of prized components of the environment—a centrally important exercise for cost-benefit analysis.
Because predicting the future is hard. Is there a first-mover advantage or handicap? It depends.
The contingent valuation (CV) procedure takes the form of posing hypothetical questions about how much people would be willing to pay to prevent the loss of some particular object.
It suffers the same preference revelation problem.
In the legal context, dealing with damage caused by oil spillage and other such acts, the contingent valuation approach has tended to be used as both (1) a measure of the actual loss involved and (2) an indication of the extent of culpability of the party whose negligence (or worse) led to the event that occurred.
This is all very well, but once a threshold of materiality is passed, enterprises will figure out a way to disintermediate the more punitive jurisdictions. All the leaky oil tankers will turn out to be owned by an elderly beggar in Panama.
The actual use of the CV procedure in devised experiments has tended to yield results that seem to go contrary to what is standardly seen as rational choice.
Because actual rational choice is 'Muth rational'- i.e. coincides with the prediction of the correct economic theory. This means we don't want to answer stupid questions about how much we would pay to save the spotted owl. We want smart guys to do the math and decide for us. Just make sure our taxes don't rise too steeply.
C. Disregard of Social Choice OptionsIt was discussed earlier that market-centered valuation has ambiguities especially when it comes to interpreting what people say they are ready to pay for public goods, including environmental preservation and existence values.
What is ambiguous about estimating 'effective demand'- i.e. money that could be committed to achieving a particular social state- by methods familiar to marketing firms? After all, when introducing a new product, part of the marketing strategy might be based on following up a customer survey with an offer for priority or discounted purchase of the new product.
In this context, it may be useful to ask what kind of social choice interpretation underlies the contingent valuation procedure.
Since there is 'transferable utility' this has nothing to do with Social Choice rankings where they are forbidden.
The philosophy behind contingent valuation seems to lie in the idea that an environmental good can be seen in essentially the same way as a normal private commodity that we purchase and consume.
Both are 'states of the world' which cost money to achieve. This would be true even in a Command economy.
The valuation that is thus expressed is that of achieving single-handedly—this is crucial—this environmental benefit.
Nonsense! The person being surveyed is a 'representative agent'. You multiply his response by the number of people in his income or other relevant category.
Consider, for example, a case in which it is inquired how much I would pay to save all the living creatures that perished as a result of the Exxon Valdez disaster, and I say $20. As interpreted in CV, it is now presumed that if $20 paid by me would wipe out altogether all these losses, then I am ready to make that payment. It is hard to imagine that this question and answer can be taken seriously by any practical person (with some idea of what the Exxon Valdez disaster produced), since the state of affairs I am asked to imagine could not possibly be true. (Indeed, if I were really to believe that my $20 can on its own clear up the mess created by the Exxon Valdez disaster, then I am not sure any importance should be attached to what I do think.)
This isn't how CVM works. First an 'existence value' for each species per household is found. Then, in a Valdez type accident, these existence values are multiplied by the numbers of the different species which were killed. It may be 6 dollars per fish and 95 per spotted owl. The Courts then impose that total as damages.
The condition of independence of irrelevant alternatives, formulated by Kenneth Arrow in Social Choice and Individual Values, states that in making choices over the relevant alternatives (that is, over the alternative states in the actual opportunity set), the social choice should not depend on our valuation of irrelevant alternatives (that is, the ones not in the opportunity set).
In which case there are no 'existence values'. You only value a fish you are personally acquainted with or which you are eating. As for the owls, you give two hoots for them.
The imagined state of affairs in which I have paid $20 and all the losses from the Exxon Valdez spill are gone is certainly not a relevant alternative, since it is just not feasible, but somehow our valuation of that irrelevant alternative is being made here into the central focus of attention in choosing between actually feasible alternatives—relevant for the choice.
Sen has simply misunderstood CVM. Apparently three Nobel Economists endorsed it.
The very idea that I treat the prevention of an environmental damage just like buying a private good is itself quite absurd.
American Judges have endorsed these 'existence values'. Perhaps SCOTUS will ban the thing. After all, the real question should be 'how soon do you want China to overtake us because we fuck over our wealth-creators so as to save owls?'
The amount I am ready to pay for my toothpaste is typically not affected by the amount you pay for yours.
Yes it is. You would be very unhappy to find that Amazon charges you more because you iz bleck.
But it would be amazing if the payment I am ready to make to save nature is totally independent of what others are ready to pay for it, since it is specifically a social concern.
The Chinese would just eat the owls and be done with them. It is only recently that we have started to pretend that the capabilities of Lesbian owls is a social concern.
The ‘‘lone ranger’’ model of environmental evaluation—central to the interpretation of CV valuation—confounds the nature of the problem at hand. We have no escape from having to use valuations derived from other methods of information gathering, such as questionnaires that describe the social states more fully.
We may have to escape from all this wokery once China overtakes us and starts fucking us over in the manner we used to fuck over the rest of the world.
Some have argued, with considerable cogency, that even though the formal question in the CV questionnaire refers to what each would pay alone to save that bit of nature, the answers are best interpreted as if they had been asked how much they would contribute in a joint effort to achieve that result.
The answer would be the same. Sen doesn't get that people can't contribute money they don't have. How much you'll pay to help a Ukrainian refugee is the same whether or not others are contributing. You gain utility by having done your bit, within your own budget. No doubt, poorer households would offer less and richer ones would offer more. One could then get an average figure and say the Government should multiply that by the number of such refugees.
It does indeed require much less willing suspension of disbelief to answer this allegedly de facto question seriously than the question that is actually asked. But it raises other difficulties. What I am willing to contribute must, given the nature of the task, depend on how much I expect others to contribute.
No. You expect others to give according to their means if they feel as you do.
There could be effects in different directions. I may be willing to contribute something if others also do, making this an assurance game.
It isn't. No money is actually changing hands. You are being asked if you care about x. If so, how much cash would you spare to help x. True, you could fuck with the mind of the questioner by saying 'fourteen billion dollars which I happen to have lying in my sock drawer' but the market research team can screen you out as a crazy person.
On the other hand, I may feel a less pressing need to do something myself if others are in any case going to do a lot and my own sacrifice could make little difference to the social object in question (this is one route toward free riding).
Sen still doesn't get that nobody is actually handing over any cash. I suppose, if somebody asks Sen whether he thinks we should put a man on Mars, he will imagine that he himself would be obliged to make that arduous journey. He would not understand that highly trained astronauts would be tasked with that mission which would be an enterprise involving thousands of scientists and engineers and astrophysicists.
If the lone-ranger model of CV is tightly specified but incredible,
because NASA wants to put very elderly Bengali on Mars- right?
the contribution model is credible but severely underspecified.
There is no real difference between them. A 'representative model' is assumed. I suppose, if some market researcher asked me 'how much would you pay to see a man on Mars?' I might reply, 'currently, nothing because I've just lost my job'. The guy then says 'I'm sorry to hear that. But, suppose you had a job, in normal circumstances how much would you pay?' I then say 'well, I guess it would be worth as much to me as watching the Olympics opening ceremony for which I paid a hundred quid.' The guy then notes that which socio-economic class I belong to and an average figure is worked out and then multiplied by the number of people in that class.
How might we make better use of the social choice approach to interpret this valuational issue?
We could try sticking it up our butt.
One requirement would be to make sure that that individuals consider the actual alternative states from which the social choice is to be made.
We don't know what those are. We can only frame hypothetical states which are mutually exclusive- though they may turn out to be incompossible.
Properly devised questionnaires can easily achieve that. This is where the market analogy is particularly deceptive, since the market does not provide specified social states to the individuals to choose from.
Yes it does. There's the social state where you did the grocery shopping and there is the social state where you didn't because you had spent all your money on hookers and cocaine.
Given the prices, I choose my basket of commodities, and you choose yours; neither has to look beyond our nose.
If we don't want to be cheated, we should do so. Are you paying less? Why? Oh. You have a 'bonus card'. Why don't I have one? Is it coz I iz bleck? No. It is because I couldn't be arsed to register the damned thing. Fuck you bonus card! Fuck you very much!
There are many problems for which all this works extremely well, but environmental evaluation is not one of them.
It works well enough for American judges. That may change as people wake up to the fact that the Chinese are eating their lunch.
In order to get people’s views on what is to be done, they have to be told what the real alternatives are,
But people tend to tell you to fuck off if you start telling them their real alternatives.
involving specification of what will be done by the others. This is not the language of market valuation, nor a part of its epistemic probe.
It is the language used by jurors deciding damage claims. By surveying a lot of households something like the Condorcet Jury theorem will apply- i.e. the value will come closer to the supposed Social Value. The devil is in the detail. If one consequence of our protecting owls is that the Chinese eat our lunch we may decide to do without them.
It requires specification of particular proposals of actions to be undertaken, with articulation of the actions of others as well (including contributions to be made by them).
Very true. Jurors have to decide how they will incarcerate or execute the serial killer on trial. The foreman says 'look, I can lock him in my basement of weekends, but, on weekdays, the rest of you will have to act as his jailor on a rotational basis.'
Valuation of social states is a part of a standard social choice exercise, but not of a market valuation exercise.
It is neither. We don't know what social states are. We can't evaluate them. True, if paid a little money, we can pretend to do so but nobody is fooled.
The market analogy is particularly deceptive in this case since it does not deal with social alternatives.
But CVM is judicial, not market based. The analogy is with jurors. But jurors don't have to themselves incarcerate or execute criminals.
VII. Concluding RemarksTo conclude, cost-benefit analysis is a very general discipline,
It is not a discipline. It is a thing that some Governments and other Organizations may do from time to time. But, equally, it may simply be a function of Management.
with some basic demands—expressed here in the form of foundational principles—
Nope. It can be wholly ad hoc.
that establish an approach but not a specific method.
No. A particular CBA exercise has a specific methodology. It may or may not dovetail with a more general 'approach'.
Even these elementary demands would be resisted by those who would like a different general approach, involving, say, implicit valuation (rather than explicit articulation) or the use of pure deontological principles (rather than broadly consequential evaluation).
If the thing is actually done then that resistance was unavailing.
There are also technical issues in the strategic use of additivity (despite the plausibility of concave objectives).
If there is convexity then there are incremental connected paths and mechanism design takes care of the problem. But CBA is needed for 'lumpy' projects where two unconnected states of the world are compared- e.g. having or not having an international airport in our City.
However, even with these various foundational demands
which, however, can be told, quietly but firmly, to go fuck themselves
(I have tried to defend them, up to a point), the approach of cost-benefit analysis is rather permissive and can be adopted by many warring factions in the field of public decisions.
Anyone can fudge the numbers any which way.
Divisiveness increases as additional requirements are imposed, including
structural demands and evaluative indifferences.
This is a great way for bureaucrats to waste each others time.
There are gains and losses—the gains mainly in convenience and usability and losses mainly in the reach of the evaluative exercise.
There are gains if worthwhile projects are green-lighted. There are losses if White Elephants- like Sen's Nalanda University- get funded.
I have tried to indicate what the pros and cons are.
Sen has failed.
While the mainstream procedures tend to incorporate all these
requirements, it is easy to see how some of these demands may be dropped
in a particular procedure of valuation.
It is easy to see that our time is being wasted by deciding to value the valuing of the valuing of the valuing of the freedom to have the freedom to have the freedom to have the capability to have the capability to fart in a manner such that the consequence of the fart is itself
The mainstream approach of cost-benefit analysis
was fine when you had good enough accountants and lawyers who were diligent and gave the greenlight to productivity enhancing infrastructure projects. Then woke nutters took over and everything turned to shit- greatly to the delight of vested interests and bureaucratic cabals.
not only takes on the foundational principles, the structural demands, and the evaluative indifferences, but also uses a very special method of valuation through direct use
of, or in analogy with, the logic of market allocation.
The analogy is with jurors deciding damages as in tort cases. That is not a market activity. It is juristic albeit concerned with determinations of fact re. what a 'reasonable person' would have done.
This market-centered
approach is sometimes taken (particularly by its advocates) to be the only
approach of cost-benefit analysis. That claim is quite arbitrary, but given
the importance of this approach, I have devoted a good deal of this paper
to scrutinizing that approach in particular.
Sen has made various arbitrary claims. They were entirely foolish.
The market analogy has merits in the case of many public projects, par-
ticularly in providing sensitivity to individual preferences, relevant for ef-
ficiency considerations (in one form or another).
No. The market analogy works if future tax revenue has higher net present value than the cost of the project.
Its equity claims are, however, mostly bogus, even though they can be made more real if explicit distributional weights are introduced (as they standardly are not in the
mainstream approach).
Sen doesn't get that it is inequitable to refuse to permit productivity to burgeon.
The use of compensation tests suffers from the
general problem that they are either redundant or entirely unconvincing.
Says a redundant cretin who doesn't get that jurors don't have to personally incarcerate or execute criminals.
Even the efficiency claims of the mainstream approach are severely com-
promised in the case of many public goods, and much would depend on the
nature of the valuations in question.
i.e. whether it was done by smart people. But this is true of any sort of Cost and Management exercise.
There are particular difficulties with
environmental valuations, especially existence values.
If so, Jurors should not decide damages in tort cases. Some States do have such laws.
In this case, the valuational demands of social choice are easy to see, but not easy to reveal
through the device of willingness to pay.
Because nothing about what is unknown is easy to reveal.
The specification of social states that is needed for intelligent valuation (including the identification of who will do what) is simply not provided by the market-based questioning (either in the form ‘‘How much would you pay, if you could single-handedly
bring about the environmental change?’’ or in the form ‘‘How much would
you contribute, assuming whatever you want to assume as to what others
are doing?’’).
Sen is too stupid to answer ordinary questions because he lacks 'theory of mind'. Immigration officers at Heathrow ask people with Indian passports who have permanent resident status if the address shown on their passport belongs to a friend or relative. This is because they need the Indian dude to say, in his own words, 'It is my house'. There is a legal reason the question is put in this way. Sen however thought the immigration officer wanted to know if he was his own friend or relative. He also thinks if someone says 'should we put a man on Mars?' that he himself is the man in question.
The spectacular merit of the informational economy of the
market system for private goods ends up being a big drag when more infor-
mation is needed than the market analogy can offer.
Which is why it is impossible to decide damages in tort cases- right? Also there can be no Pigouvian taxes or Social Security transfers.
When all the requirements of ubiquitous market-centered evaluation have
been incorporated into the procedures of cost-benefit analysis, it is not so
much a discipline as a daydream.
It is neither. It is something some people may get paid a little money to do. If they are smart, this may turn out to be money well-spent. If they are Sen-tentious cretins, it is time and money wasted.
If, however, the results are tested only in
terms of internal consistency, rather than by their plausibility beyond the
limits of the narrowly chosen system, the glaring defects remain hidden and
escape exposure.
Sen should have explained to Kennedy that NASA could not put a man on the moon because Sen is a man and he doesn't like the moon. Why not land him on the Sun instead?
Daydreams can be very consistent indeed.
Sen is very consistently stupid and useless. He and his best friend once wrote a paper explaining why Project Appraisal was shit. Then Sen appraised his friend's wife and ran off with her to London.
Sensible cost-benefit analysis demands
sensible people, not Sen-tentious cretins.
something beyond the mainstream method, in par-
ticular, the invoking of explicit social choice judgments that take us beyond
market-centered valuation.
to a place where we can value the valuing of the valuing of the freedom of the freedom of the fart that farts itself
The exponents of the mainstream need not face
much questioning from the deontologists (who will not speak to them),
Why not? There could be a cadre of CB Analysts whose duty is clearly laid out. The deontologist can say 'do your duty diligently' and they can reply 'suck my cock diligently you useless pile of shit'. The conversation can then proceed on more genial lines as the deontologist explains that she would need a fucking electron microscope to detect the cock of the CB Analyst.
but they do have to address the questions that other cost-benefit analysts raise.
The debate may be, in a sense, ‘‘internal,’’ but it is no less intense for that reason.
No. It is only intense because those doing it are as dense as shit. I suppose the 'Journal of Legal Studies' published this dreck because some lawyer might want to tell a judge that a Nobel Economist thought 'existence values' were a pile of horseshit. The Judge would then discover that the Nobel Economist was from the Turd World and reject the argument. Still the current SCOTUS might use even the cretin Sen to overturn all sorts of pro-Environment Court rulings or State laws.
No comments:
Post a Comment