S2E19. Lisa Robinson on Cost-Benefit Analysis

On this episode of Free Range, host Mike Livermore is joined by Lisa Robinson, a senior research scientist and the deputy director at the Center for Health at the Harvard School of Public Health. Lisa is a leading expert in the use of cost-benefit analysis to evaluate public policy. The conversation begins with a discussion of the use of cost-benefit analysis and its importance in policy making. Robinson describes cost-benefit analysis as a systematic framework to examine policy impacts, which can help inform the choices made by political decision makers. Often, there are substantial uncertainties in analysis, which means that they do not deliver highly precise estimates. That said, the analytic process often generates useful information that can improve a policy. (0:11-5:22) The two then discuss controversies surrounding cost-benefit analysis. Controversies include how to value morality risk reduction through tools like the “value of statistical life.” Robinson discusses her view that the term “value of statistical life” is misleading, because actually most rules affect very small risks that are experienced by large populations. Robinson also emphasizes the non-paternalistic nature of cost-benefit analysis, because it is based on how people actually value effects in the world. (5:22-25:56) Robinson then describes how cost-benefit analysis has become complex over time which makes it difficult for the public to understand, and therefore analysts need to improve communication with non-experts. There are also empirical challenges surrounding this topic, with rising debates around accounting for distributional effects of this analysis. Often the effects of cost-benefit analysis are unevenly spread, causing issues for disadvantaged groups and enforcing the relevancy of value judgments. Overall, cost-benefit analysis informs decisions but does not dictate them. It provides useful information, but there are limitations such as legal constraints. More work is needed to extend and refine the framework across policy areas. Despite its difficulties, for Robinson, overall cost-benefit analysis contributes to good policy decisions that improve social welfare. (25:56-59:53)