Cost Benefit Analysis In Welfare Economics

1844 Words 8 Pages
From politicians considering new infrastructure projects to young adults considering starting a family, the cost-benefit analysis has been touted as a cure for indecision. Based on seemingly firm economic and philosophical foundations, use of the method has become a ubiquitous part of modern society’s decisional endeavors. Whether it focuses directly on financial gain or on interpretations of nonmonetary changes in wellbeing, this type of analysis provides a framework that allows individuals to confidently make decisions of all varieties and levels of importance. The reality, though, is that cost-benefit analysis is not a silver bullet. At its core, as Hausman and Mcpherson state, it is predicated on a repressively “narrow” evaluative apparatus (2006). Consequently, it is merely part of the fastidious and complex assessment necessary to make a truly “good” decision, and it should be treated as such. Cost-benefit analyses are, at their core, derived from the assumptions and assertions of wellbeing purported in modern welfare economics. Contemporary welfare economics has come to be one of the most dominant perspectives in modern economic thought, representing perhaps the most prominent, persisting substantive view. The perspective centers on the assertion that general wellbeing in the aggregate is the true “good”, or end, …show more content…
One of the most notable applications of modern welfare economics is that of free market justification. The most direct implementation of the theory in such a manner can be seen in the Pareto efficiency justification for free markets. The rationale for this perspective is that free markets are justified because they, being composed of rational and free agents that should only endeavor to partake in interactions that better satisfy their preferences, lead continually to a state in which more preferences are

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