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Cost-benefit analysis links

This page provides annotated links to online material related to the Pareto improvements and Kaldor-Hicks efficiency criterion page, which discusses the role and the limitations of the concepts of Pareto improvement, Kaldor-Hicks efficiency and cost-benefit analysis in the development and implementation of Government and regulatory policies, programmes and projects.

Public sector guidance documents

(See also Regulatory impact assessments.)

HM Treasury (2003) "Green Book" Appraisal and Evaluation in Central Government
Available from http://greenbook.treasury.gov.uk/

This UK Government guidance document on policy assessment outlines an approach to cost-benefit analysis in which all impacts are to be identified and quantified wherever possible:

"The Green Book describes how the economic, financial, social and environmental assessments of a policy, programme or project should be combined."

The 2003 edition of the Green Book marks a few important changes in approach from the previous version, notably:

Commissariat au plan (2004) Révision du taux d'actualisation des investissements publics
http://www.plan.gouv.fr/intranet/uploadx%20actualisation%2024-01-05.pdf

French Government report on public sector discount rates which recommends a reduction from 8 per cent to 4 per cent (real) and the "political rehabilitation" of social cost-benefit analysis as a method of policy analysis, which it argues should be used to assess all forms of public spending, not just for infrastructure investments.

The report notes some of the difficulties with a Kaldor-Hicks criterion when there are other, e.g. distributional, policy objectives, but suggests that the calculations are nevertheless informative in order to assess the costs, in terms of economic efficiency, of decisions which might be primarily motivated by other objectives.

Articles and comments

Additional references and contributions welcome.

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Last changed by Franck at 5:47 AM on Tuesday 6 February 2007.

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