Cost-benefit analysis: too often biased

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dc.contributor.author Vejchodská, Eliška
dc.contributor.other Ekonomická fakulta cs
dc.date.accessioned 2015-12-07
dc.date.available 2015-12-07
dc.identifier.issn 12123609
dc.identifier.uri https://dspace.tul.cz/handle/15240/13436
dc.description.abstract Cost-benefit analysis (CBA) is widely applied in many countries in evaluating public projects and regulatory instruments. It is employed, for example, as a basis for decisions within the European Union’s subsidy policy. CBA enables to express the comprehensive effect of a project or a governmental regulation on social welfare and thereby to introduce expertise to political decision-making. However, its practical applications face many problems. Different methodological choices in performing CBA enable to obtain diametrically opposite conclusions. Moreover, the way how investors apply for EU Fund subsidies encourages CBA performers to adjust CBA results to requirements of subsidy applicants. The unavoidable consequence is frequently mendacious, unreliable and misleading CBA. The paper brings an overview of the flexibility in CBA methodological choices. It further focuses on analysing the CBA performance practice in the area of CBA project appraisal for the purposes of applying for EU funding. We examine the reasons for manipulating results using a theoretical analysis and support our findings by our own empirical survey among CBA performers. As our survey among commercial CBA performers uncovers, many entities performing CBA lack expert background for CBA performance and performed CBA are often biased and misleading. Our theoretical analysis shows its main reason: The person choosing and remunerating the CBA performer for the purposes of a project appraisal for EU funding is at the same time the subsidy applicant and thus with a clear interest in the optimistic result of the CBA. CBA performers are happy to oblige their customers. The remedy to this situation is to get rid of this unintentional alliance among CBA performers and subsidy applicants. en
dc.format text
dc.format.extent 10 s. cs
dc.language.iso en
dc.publisher Technická Univerzita v Liberci cs
dc.publisher Technical university of Liberec, Czech Republic en
dc.relation.ispartof Ekonomie a Management cs
dc.relation.ispartof Economics and Management en
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dc.rights CC BY-NC
dc.subject cost-benefit analysis en
dc.subject CBA en
dc.subject bias en
dc.subject reflection en
dc.subject Czech Republic en
dc.subject.classification D61
dc.subject.classification Q38
dc.title Cost-benefit analysis: too often biased en
dc.type Article en
dc.date.defense 2015-12-01
dc.publisher.abbreviation TUL
dc.relation.isrefereed true
dc.identifier.doi 10.15240/tul/001/2015-4-005
dc.identifier.eissn 2336-5604
local.relation.volume 18
local.relation.issue 4
local.relation.abbreviation E&M en
local.relation.abbreviation E+M cs
local.faculty Faculty of Economics
local.citation.spage 68
local.citation.epage 77
local.access open
local.fulltext yes


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