When is quantifying benefits a bad thing….

A recent article in the New York Times, In New Calculus on Smoking, It’s Health Gained vs. Pleasure Lost, describes the economic analysis being done by the US Food and Drug Administration to support tobacco regulations.  According to the Times, the economic analysis includes a “happiness measure”— the lost pleasure of smoking.  In the analysis, the value of lost happiness offsets much of the costs of smoking (cost of illness, for example), with the implication that tobacco regulation looks much less attractive.

Those critical of Benefit-Cost Analysis (BCA) can point to this as yet another example of economic analysis coming up with the “wrong” result, and the evils of using BCA. But the problem is not that economic analysis of regulations  is inherently bad, but rather that economics-poorly-done does not support good decision making.

(more…)

Advertisements

Choosing Not to Divest is Not Value-Free

by Fran Sussman

In his DOT Earth column in the NYT on October 4, 2013, A Closer Look at Harvard’s Choice on Fossil Fuels, Andrew Revkin wrote about the issue of Harvard University President Drew Gilpin Faust’s statement on the university’s decision not to divest itself of fossil fuels, despite student efforts. Reading the column raised some interesting parallels in my mind between the way economists separate fact from judgments about welfare, and President Faust’s justification of the university’s decision. (more…)

Economics in the National Climate Assessment

by Fran Sussman

The draft National Climate Assessment (NCA)—which became available for review this past January–is the third to be produced since the Global Change Act of 1990 (P.L. 101-606) mandated that the U.S. Global Change Research Program (USGCRP) provide Congress and the President with periodic assessments of trends in global climate and the impacts of global change on natural and human systems in the U.S. Despite providing an impressive review of the literature on the science and physical effects of climate change, the assessment does not—intentionally—take the next step of assessing what we know about projected economic impacts and adaptation costs. (more…)

%d bloggers like this: