Consider a drug treatment program that has been shown to lower recidivism rates among participants. Although a cost-benefit analysis (CBA) would typically include benefits to taxpayers in terms of lower costs for the criminal justice system, should the following benefits also be included?
- Benefits conferred to participants who complete the program successfully, such as increased future earnings and better health;
- Benefits to the children of successful program participants, such as increased well-being and educational attainment; and
- Benefits to businesses and neighborhoods, such as increased commercial activity and property values resulting from reduced crime.
In CBA, when parties are said to have standing (also referred to as perspective), their benefits and costs are included in a study’s calculations. From an analytical standpoint, the preferred approach is to assume that all parties affected by the policy under examination have standing, because CBA is meant to answer the question, “Will society as a whole be better off by undertaking this project rather than not undertaking it?”
But in reality, apart from the practical challenges of conducting a thorough study, the question of whose benefits and costs matter is in the eye of the beholder—and who should have standing in a CBA can be subject to debate. Ideally, analysts should work with decision makers to determine who has standing and why, and they should promote consistency when determining who is granted standing from one policy choice to another. Analysts should also clearly document which perspectives they included in the study and which ones they excluded or discussed only qualitatively, as well as how they made those choices.
For more information on standing, see the following articles:
Whittington, D., and MacRae, Jr., D. “The Issue of Standing in Cost-Benefit Analysis.” Journal of Policy Analysis and Management 5, no. 4 (1986):
Trumbull, W.N. “Who Has Standing in Cost-Benefit Analysis?” Journal of Policy Analysis and Management 9, no. 2 (1990): 201-218.
Zerbe, Jr., R.O., Davis, T.B., Garland, N., and Scott, T. “Toward Principles and Standards in the Use of Benefit-Cost Analysis: A Summary of Work.” (Seattle: Benefit-Cost Analysis Center, 2010).