LEARNING FROM EX-ANTE EX-POST COST-BENEFIT COMPARISONS - THE COQUIHALLA HIGHWAY EXAMPLE

The purpose of cost-benefit analysis (CBA) is to help public sector de cision-making. The ''help'' varies according to when it is performed. CBA can be performed ex ante (EA), ex post (EP), or in the interim-in medias res (IMR) of a project. We propose a fourth class of CBA-one th at compares EA with EP or with IMR CBA on the same project. In fact, t his type of comparison has not been conducted in the literature. We su ggest that without such research it is impossible to evaluate the prac tical value of CBA as a decision-making tool. This article demonstrate s the value of such comparisons, and contrasts them with other classes of CBA. Specifically: (1) it compares the advantages of comparison st udies with other classes of CBA; (2) it categorizes four major types o f error in CBA studies-omission errors, forecasting errors, measuremen t errors, and valuation errors-and models the impact of these errors o n actual and estimated net benefits over time; (3) it examines the cau ses of the four different types of error; and (4) it compares three di fferent classes of CBA on the same highway project: one clearly EA, on e 18 months later (an IMR study) and one 7 years later (which we treat as an EP study). There are major differences in the estimates of net benefits. Contrary to what might have been expected, the largest sourc e of difference was not due to errors in forecasts, nor differences in evaluation of intangible benefits, but from major differences in decl ared and actual construction costs of the project. That is, the larges t errors arose from what most analysts would have thought were the mos t reliable figures entered into the CBA. We conclude that comparison s tudies are potentially the most useful for learning about the accuracy and efficacy of cost-benefit analysis to decision-makers and evaluato rs.