It is challenging to explain benefit-cost analysis (BCA) to the general public or to members of other professions lacking sufficient knowledge of—and appreciation for—applied microeconomics. This post discusses the nature of this challenge, and raises the question: should the SBCA develop a more concerted communications strategy to better explain the fundamental concepts of the discipline and their practical application?
Part of the communication challenge faced by BCA practitioners is the one shared by any epistemic community. A specialized terminology and shared paradigm increase communication efficiency within the group, at the cost of communicating outside of it. This communication gap is especially consequential for the BCA field, however, because the purpose of BCA is to inform public decision-making. To do that, BCA practitioners have to communicate with other professionals involved in the policymaking process who may have their own disciplinary paradigms (e.g., scientists, engineers, and lawyers), as well as journalists and opinion-leaders, and of course, the general public. The nature of the BCA communication challenge is multi-faceted. First, terminology like “benefits,” “costs,” and “efficiency” have precise definitions within the discipline but are popularly used with a range of other meanings. Conceptual differences underlying the same terminology are common—such as the public perception that the term “benefit” applies to economic development objectives like “job creation” (Courant 1994) or to the receipt of transfer payments. Increased governmental revenue, or regional income associated with infrastructure projects, are commonly seen as benefits and represented as such in practitioner-produced “benefit-cost” analyses (Boardman et al. 1993). Beyond differences in language usage are differences in the way policy is perceived. The public often sees policy through the lens of stakeholder self-interest, rather than from a larger concept of the “public interest” (Krutilla 2005). From a typical stakeholder’s perspective, the economic efficiency measure—the sum of a policy’s net effects on everyone -- is less salient than are commonly-stated political objectives, such as better air quality, small business growth, job creation, and the like. Heterogeneous stakeholders are not likely have a unanimous consensus about policy choices and this well-known reality, coupled with the fact that the benefits and costs of a public decision can fall on different groups, will create winners and losers. Stakeholder losses, unless widely diffused, are likely to be more salient than the relatively abstract notion that a portfolio of efficient policies and/or income transfers will probably leave everyone ultimately better off. Moreover, stakeholder conflict over public decision-making is likely to induce a “thinking fast” (Kahneman 2011) mindset disinclined to accept the logic and results of evidence-based analysis.
