Rethinking cost-benefit analysis

This paper analyzes cost-benefit analysis from legal, economic, and philoso phical perspectives. The traditional defense of cost-benefit analysis is th at it maximizes a social welfare function that aggregates unweighted and un restricted preferences. Professors Adler and Posner follow many economists and philosophers who conclude that this defense is not persuasive. The view that the government should maximize the satisfaction of unrestricted prefe rences is not plausible. However, the authors disagree with critics who arg ue that cost-benefit analysis produces morally irrelevant evaluations of pr ojects and should be abandoned. On the contrary, cost-benefit analysis, sui tably constrained is consistent with a broad array of appealing normative c ommitments, and it is superior to alternative methods of project evaluation . It is a reasonable means to the end of maximizing overall welfare when pr eferences are undistorted or can be reconstructed. And it both exploits the benefits of agency specialization and constrains agencies that might other wise evaluate projects improperly.