Define 'cost-benefit analysis' in policy evaluation and one potential criticism in development planning.

Define 'cost-benefit analysis' in policy evaluation and one potential criticism in development planning.

• A. A method that compares the expected costs and benefits of a project; its main criticism is that it ignores all non-economic factors.
• B. A method that only considers costs, ignoring benefits.
• C. It can be criticized for valuing social and environmental impacts in monetary terms and for distributional effects.
• D. It ignores discount rates completely.

Answer: (C)

Cost-benefit analysis in policy evaluation compares the total expected costs and total expected benefits of a project, usually converting outcomes into monetary terms so different effects can be directly weighed against each other. In development planning, this approach helps decide which projects deliver more overall value by showing when benefits exceed costs. A key criticism is that putting social and environmental impacts into monetary terms can misrepresent or overlook important qualitative values, such as cultural significance, ecological integrity, or long-term well-being. It also draws attention to distributional effects: who gains and who bears the costs, which can matter more for equity than the sheer size of total benefits. This critique reminds us that while CBA is a useful tool, it may not fully capture equity considerations and non-market values essential in development decisions.

Cost-benefit analysis in policy evaluation compares the total expected costs and total expected benefits of a project, usually converting outcomes into monetary terms so different effects can be directly weighed against each other. In development planning, this approach helps decide which projects deliver more overall value by showing when benefits exceed costs. A key criticism is that putting social and environmental impacts into monetary terms can misrepresent or overlook important qualitative values, such as cultural significance, ecological integrity, or long-term well-being. It also draws attention to distributional effects: who gains and who bears the costs, which can matter more for equity than the sheer size of total benefits. This critique reminds us that while CBA is a useful tool, it may not fully capture equity considerations and non-market values essential in development decisions.