Cost Benefit Analysis Essay

Cost-benefit analysis is an economic approach decision making that compares the strengths and weaknesses of each choice in order to determine which option will provide the most amount of benefits and the least amount of costs. This method is often applied to decisions that concern the environment as an attempt to determine the value of the environment before following through with decisions to preserve or utilize the environment for resources. Although many economists believe that cost-benefit analysis is an efficient way to make most decisions, some philosophers suggest that certain things, including the environment, have innumerable values, therefore, cost-benefit analysis may not be a reliable method to make decisions regarding these things.

For Nussbaum, the distinction between the obvious question and the tragic question is not based on the difficulty of a decision, but whether or not any of the options violate some moral principle. Nussbaum claims that when faced with a decision, one must first ask the tragic question in order to determine which, if any, of the available options violate some moral principle, and to proceed with the obvious question, there must be at least one option which does not violate a moral principle (Nussbaum 1007). In regards to the application of cost-benefit analysis to answer either of these questions, Nussbaum writes, “cost-benefit analysis helps us answer the obvious question; but it does not help us pose or answer the tragic question, and it frequently obscures the presence of a tragic situation, by suggesting that the obvious question is the only pertinent question” (1005). This simply means that one can use cost-benefit analysis to answer the obvious question, as the obvious question is meant to determine the best option that does not violate moral principles, so cost-benefit analysis can be a useful tool to think through complex decisions to determine the strongest of those

Schmidtz writes that the greatest problem with cost-benefit analysis is that it allows for some people to be sacrificed for the greater good, and thus may call for some violation of morals (154). Similar to Nussbaum’s idea of a tragic situation, Schmidtz agrees that one may have to make a decision that will ultimately require a violation of someone’s morals, but contrary to Nussbaum, Schmidtz claims that one can use cost-benefit analysis to determine which option will violate the morals of only some rather than all. Another limit of cost-benefit analysis that Schmidtz brings up is that it may not be easy or even possible for a decision maker to consider every possible externality: “Even if we know the costs and benefits of any particular factor, that does not guarantee that we have considered everything. In the real world, we must acknowledge that for any actual calculation we perform, there could be some cost or benefit or risk we have overlooked” (162). Schmidtz acknowledges that human decision makers cannot possibility account for every single external cost, but he does claim that this limit can be accounted for if the decision is opened to the public for scrutiny. For Schmidtz, public deliberation of a decision is a practical way for a decision maker to account for the most externalities to avoid moral