The Cost-Benefit Fallacy: Why Cost-Benefit Analysis Is Broken and How to Fix It

Flyvbjerg, Bent; Bester, Dirk

doi:10.1017/bca.2021.9

Cited by 50 publications

(11 citation statements)

References 37 publications

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“…At the same time, with the development of economy, the research on cost-bene t analysis is also on the rise. Relevant researchers combine cost-bene t analysis with machine learning algorithms, and use data mining ideas to mine the rules of cost-bene t analysis to provide auxiliary support for decision-making [10]. There are also relevant researchers who establish statistical curves based on cost-bene t data and establish analytical models based on the rules found in the statistical process [11].…”

Section: Research Statusmentioning

confidence: 99%

Study on fault tolerance method of cloud computing accounting service platform for middle data supporting cost-benefit analysis

Jin

Zhang

2022

Preprint

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Study the fault-tolerant method of intermediate data of cloud computing accounting service platform to support cost-benefit analysis, provide cost-benefit analysis function for the platform, and strengthen the fault-tolerant ability of intermediate data of the platform. Build an enterprise cloud computing accounting service platform, use the network environment of the accounting service platform provided by the cloud service provider, collect the internal and external accounting service system data of the enterprise through the data collection layer, and transmit it to the data warehouse of the data processing storage layer after data cleaning, extraction and processing. The data processing storage layer calls the collected data to analyze the transaction cost-effectiveness of the enterprise. The intermediate data fault-tolerant model is constructed. After being solved by ant colony algorithm, the intermediate data generated in the process of cost-benefit analysis and other accounting services are fault-tolerant processed, and the platform accounting service results are output to the interactive interface through the data output display layer, so as to realize the interaction with users. The experimental analysis shows that:this method can effectively analyze the transaction cost and benefit of enterprises, the data availability probability after fault-tolerant processing is higher, and the read-write load is lower.

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Section: Research Statusmentioning

confidence: 99%

Study on fault tolerance method of cloud computing accounting service platform for middle data supporting cost-benefit analysis

Jin

Zhang

2022

Preprint

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“…The role of BCA for cost overruns Flyvbjerg and Bester (2021) show that the results of ex ante BCAs frequently are in error; costs are systematically underestimated, and benefits overestimated. With this as the empirical basis, they define "the cost-benefit fallacy" as a situation in which individuals behave as if benefit-cost estimates are largely accurate and unbiased, when in fact they are not.…”

Section: 3mentioning

confidence: 99%

“…In their critique of BCA, Flyvbjerg and Bester (2021) show that cost underestimation is more common than benefit overestimation. This observation should be cast against the fundamental transparency differences between the costs and benefits in a BCA.…”

Section: 3mentioning

confidence: 99%

The Weak Spot of Infrastructure BCA: Cost Overruns in Seven Road and Railway Construction Projects

Nilsson

2022

J. Benefit Cost Anal.

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This article describes the process from first proposals in the early 1990s to project completion many years later for seven large Swedish road and railway projects. The purpose is to find reasons for the massive cost overruns as well as explanations for why projects are brought to completion despite much higher costs than when the decision to build was made. Cost overruns are set in an institutional context to highlight the interplay among national, regional, and local policymakers. National investment programs are seen as promises by other parts of society, irrespective of whether project costs increase during the process toward procurement and implementation. Another aspect is that the infrastructure manager’s administrative framework currently makes it impossible to compare costs in contracts with final cost, meaning that there is no institutionalized learning process in place. Design preparations and the estimation of costs for new projects must therefore be done without an understanding of what has been working well in the implementation of previous projects. While Benefit-Cost Analysis (BCA) played no role in the planning of the seven projects, the article sends a stark warning that early cost estimates provide poor input for assessing project rate of return.

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“…Sunstein (2013, 235-6), recognizing that politicians and interest groups try to manipulate voters by enlisting cognitive biases, argues that people's inability to properly assess risk provides a rationale for contrary government actions, which may even be desired by citizens who know they have difficulty in such circumstances. 33 He suggests, as do Flyvbjerg and Bester (2021), that decision-making by benefit-cost analysis at least ought to be an ingredient in the democratic process.…”

Section: Problems Due To the Behavior Of Votersmentioning

confidence: 99%

Political Competition and the Study of Public Economics

Winer

Ferris

2022

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Why is an understanding of political competition essential for the study of public economics and public policy generally? How can political competition be described and understood, and how does it differ from its strictly economic counterpart? What are the implications of the fact that policy proposals in a democracy must always pass a political test? What are the strengths and weaknesses of electoral competition as a mechanism for the allocation of economic resources? Why are tax structures in democratic polities so complicated, and what implications follow from this for normative views about good policy choice? How can we measure the intensity of political competition, why and how does it vary in mature democracies, and what are the consequences? This Element considers the approach to answer these questions, while also illustrating some of the interesting theoretical and empirical work that has been done on them.

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The Cost-Benefit Fallacy: Why Cost-Benefit Analysis Is Broken and How to Fix It

Cited by 50 publications

References 37 publications

Study on fault tolerance method of cloud computing accounting service platform for middle data supporting cost-benefit analysis

Study on fault tolerance method of cloud computing accounting service platform for middle data supporting cost-benefit analysis

The Weak Spot of Infrastructure BCA: Cost Overruns in Seven Road and Railway Construction Projects

Political Competition and the Study of Public Economics

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