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The Fatal Flaw of Cost-Benefit Analysis: The Problem of Person-Altering Consequences

October 2008

Citation: 38 ELR 10703

Issue: 10

Author: Gregory Scott Crespi

Editor's Summary: Cost-benefit analysis, which is now the dominant approach in American public-sector decisionmaking, suffers from a serious and perhaps even fatal flaw that is unfortunately not widely recognized. Any social policy, among its other impacts, will also have "person-altering consequences" in that it will have geometrically cascading and eventually universal effects on the genetic identities of the members of future generations. The cost-benefit analysis methodology as now applied fails to incorporate those consequences. As a result, the policy recommendations reached through this methodology are essentially irrelevant to the real choices at hand. However, any attempt to incorporate person-altering consequences into cost-benefit analysis through the usual willingness-to-pay metric leads to the counterintuitive and unhelpful result that all of the policy options under consideration will each generate massive future net benefits of uncertain magnitude. There does not appear to be any plausible way to avoid this result within the framework of secular and consequentialist ethical premises from which the cost-benefit analysis methodology is derived, and the willingness-to-pay valuation criterion may therefore have to be supplemented by or even discarded altogether in favor of normative criteria developed from secular but non-consequentialist ethical premises, or from overtly theistic premises.

Gregory Scott Crespi is a Professor of Law at the Dedman School of Law, Southern Methodist University. He would like to thank Jeff Kahn and Eric Posner for their helpful comments on earlier drafts of this Article.

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