Investing is risky. How can cost-benefit analysis help?

by , September 27, 2012

People are constantly faced with decisions—whether mundane, such as whether to leave the house without an umbrella, or significant, such as whether to quit a terrible job in this economy. Regardless of the magnitude of the decision, we make choices every day without certainty about the results. That is, we take risks.


September focus: Risk and uncertainty in cost-benefit studies

by , September 4, 2012

This month on the blog we’ll focus on the roles risk and uncertainty play in cost-benefit analyses (CBA) of justice policies.

In the simplest terms, uncertainty involves knowledge and risk involves action. Uncertainty is a degree of doubt or some lack of confidence about what we know. In cost-benefit studies, uncertainties arise because of possible differences between a policy’s effects and the measurements or projections of those effects—and because the monetary values assigned to those effects are estimated, not iron-clad.