Project Evaluation with Democratic Decision-making: What Does Cost-benefit Analysis Really Measure?

It is often argued that projects involving public good changes should be chosen on the basis of monetary valuation and cost-benefit analysis (CBA). In democratic project selection processes, however,decision-makers cannot generally interpret CBA as measuring projects’ social welfare effects.The reason is partly that decision-makers’views of the good society differ –that is, they typically do not hold the same social welfare function – and partly because separating efficiency anddistribution is even less straightforward in democratic than in dictatorial decision-making processes.