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.

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Global annual disaster costs

by Fran Sussman

A recent post on CD&S asked what we might learn from the economic impacts of disasters about ways to minimize the long term effects on the economy of these extreme weather events.

The post was a response to reading a recent article, “Global Cost Estimates from “Informing Climate Adaptation:  A Review of the Economic Costs of Natural Disasters,” by Carolyn Kousky, which appears in the journal, Energy Economics.  Although the focus in the article is on the conceptual basis of the estimates rather than the story told by the numbers, the author does pull together some estimates and the results are rather striking.   (more…)

Lessons from empirical studies of the costs of extreme weather events

by Fran Sussman

A critical gap in our knowledge about the economic costs of climate change is the cost of extreme events. Until earlier this week, the calmness of this Fall’s hurricane season had lulled  the public and policy makers into a sense that perhaps we have more time. But the devastation and loss in life caused when Typhoon Haiyan—among the worst in history—slammed into the Philippines has quickly dispelled any developing sense of security about extreme events.  As we make choices concerning the types and magnitude of investments and institutional changes we need to make for the future, the question arises, “Is there anything to be learned from studies of the costs of extreme events about how to prepare—how much to spend on prevention and preparedness, or where to target investments?” (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…)

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