The Ethics of Benefit-Cost Analysis

Headshot of Lisa Robinson Listening

Conventional benefit-cost analysis is well-established and widely used globally to assess policy options that profoundly affect public health. The normative assumptions that underlie theconventional approach as well as alternatives were explored in a week-long conference organized by CHDS Deputy Director Lisa Robinson, Dan Wikler (Harvard Chan School), Nir Eyal (Rutgers University), and Samia Hurst (University of Geneva). The conference, Healthy, Wealthy, and Wise – The Ethics of Health Valuation, was sponsored by the Brocher Foundation in Geneva Switzerland.

Conventional benefit-cost analysis measures changes in individual welfare based on peoples’ preferences for exchanging their own money for changes in their own wellbeing, and measures changes in societal welfare by summing these values across individuals. These assumptions are often challenged on ethical grounds. One set of questions relates to how welfare is defined. For example, should we focus on satisfying individual preferences? On maximizing other measures of wellbeing? Give priority to health over other attributes of welfare? In addition, there are worries that conventional benefit-cost analysis underweights benefits that accrue to the poor, ignores distributional impacts, relies on self-regarding rather than other-regarding (e.g., altruistic) values, and does not adequately distinguish between morally desirable and undesirable preferences. Outcomes that are difficult to quantify or to value in monetary terms, such as respect for human dignity, also cannot be easily accommodated within this framework.

This conference explored and compared the ethical foundations of several alternative approaches, including the use of subjective wellbeing (“happiness”) units, social welfare functions, and equivalent incomes or healthy life years, as well as options for incorporating other-regarding preferences in monetary values. It resulted in several proposals for further investigating and implementing approaches that may better account for changes in societal wellbeing.

Learn more: Read about the Brocher Summer Academy in Global Population Health, 2022:  Healthy, Wealthy, and Wise – The Ethics of Health Valuation
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