The practical result of cost-benefit analysis’s false objectivity is that nearly every step of its methodological process affords an opportunity for smuggling racism into the regulatory system , much as the facile rhetoric of “colorblindness” – whether the product of good faith naiveté or more sinister ulterior motives – has enabled racism to flourish in our country and weave its way into the fabric of many of our institutions.
The two most obvious examples of state actions that have historically been exempted from cost-benefit constraints are the military and local law enforcement. Not only do both these institutions have long, appalling histories as agents of racial discrimination and oppression, they continue to serve as two of our government’s most prominent contributors to structural racism today. Beyond the conspicuously egregious acts of racism enabled by these institutions – police brutality or embrace of overtly racist symbols of the Confederacy, for example – both routinely deploy their monopoly on state-authorized violence on behalf of elites’ interests in ways that maintain status quo conditions of injustice and inequality.
If the benefits and the costs were both on the same ledger – that is, if those who profited from pollution also bore its health burdens – there would be a hint of justice in the calculation. But that's not the case. Rich people do the polluting and the profiting, while someone else bears the health costs.
As other legal scholars have observed, by selecting money as the common metric for comparing welfare changes across individuals, cost-benefit analysis becomes systematically skewed to favor the interests of people and companies that have a lot of it.
The Department of Justice once performed a cost-benefit analysis on a rule to prevent the incidence of prison rape, for example.
Since it is difficult to measure aggregate welfare, or even agree on what it means, they use the size of the nation’s economy as a proxy. In practice, that means that the quality of regulatory decision-making is judged by the extent to which it succeeds in maximizing wealth as determined through cost-benefit analysis.
These economists observed a curious result in these studies, though: Black workers typically “ demanded ” a much smaller wage premium than did white workers, which implied that their lives – or at least their VSLs – should be worth less for cost-benefit analysis purposes.
Most professions these days require more than general intelligence. They require in addition the ability to collect, analyze and think about data. Personal life is enriched when these same skills are applied to problems in everyday life involving judgment and choice.
How to conduct a cost-benefit analysis. Why you should throw the analysis away after doing it if the decision is personal and very important. How to avoid throwing good money after bad. How to avoid doing something that will prevent you from doing something more valuable. Why it can be expensive to try to avoid the possibility of loss.