Abstract

Impact assessment is of growing importance as a policy tool in the European Union. Sometimes it is equated with cost\benefit analysis, but often those do so lack a clear idea of what cost\benefit analysis entails as the normative standard for good policy. Economic analysts are likely to applaud moves toward cost\benefit analysis in policymaking, but this paper argues that they should be cautious in their advocacy. Cost\benefit analysis should be used to evaluate policies that seek to remedy market failures in particular sectors. Even there, however, serious measurement problems rise problems that do not have purely technical solutions. For other types of policies, especially large-scale, long-term programs with serious irreversibilities, cost\benefit analysis, in the classical welfare economics or Kaldor-Hicks sense, is not an appropriate evaluative tool. Impact assessment is either an unproblematic exhortation to think about the effects of policies on the real world or a questionable effort to impose a framework on policy evaluation based on contestable normative assumptions.

Reference

Susan Rose-Ackerman (Yale), “Impact Assessment and Cost-Benefit Analysis: What Do They Imply for Policymaking and Law Reform?”, IAST General Seminar, Toulouse: IAST, December 15, 2011, 16:30–18:00, room MF323.