Problem: Cost-Benefit Analysis
a) Cost benefit analysis requires that we put a cost or monetary value on certain things. While direct costs and benefits are easy, please discuss how we might put a value on non-market costs and benefits. Provide some examples. One thing that often comes up in our analysis is the ideas of "cost of life". While it goes without saying that the value of life is "priceless" regulatory bodies routinely put a value on it. What are some of the ways that various government bodies estimate the cost of life? Do all values tend to one number but within a country (say between agencies) or even between countries? Why or why not? How does this make the process of cost benefit analysis more difficult? How do you mitigate the risks of these differences?
b) What are some of the reason's analysts cite that suggest cost benefit analysis is not the right tool to consider when evaluating projects? What can you say as a cost benefit analyst to show that CBA is still relevant? Is it possible to argue for some pollution while still being practical/correct? Who is more practical in your estimation, those that dismiss CBA or those that embrace it? Why or why not?