Question

In your opinion, when economists are doing cost-benefit analyses, should they use “well-being”* information, or should they continue to solely use monetary costs and benefits?

* ”Well-being”, in this sense, refers to the pleasures and pains people experience.

Answer 1

Cost benefit analyses is a tool used for the decision making by an economist. It will be a use full tool for an extend.It is a commonly used technique expressed in monetary terms and also they can be adjusted according to the time value of money. But when an economist analyses purely based on monetary cost and benefits it does not complete the analysis.

All the cost and benefits cannot be measured using monetarily.Thus the accuracy depends on the complete analysis. Here when the comparison between the benefits and cost associated with the project or the policy that is considered is done using cost benefit analysis the economist should include the well being of the people associated with it along with the use of monetary cost and benefit information. So that when moderations are done the project is most successful in future also. This will secure the life of the future generations also and ensure their well being .

Monetary analysis can only make the business progress. The accuracy and the speed of the progress can be ensured by including the ecosystem to the cycle of analysis so that by analysing the effect of the new project on people and the ecosystem can be also studied and thereby the conditions and terms from the ecosystem can be used properly to increase the benefits and reduce the cost of the project and thus increasing the final surplus of the company. It will be more effective when the ecenomist uses well-being of the people along with the monetary cost and benefits as a tool for the effective cost analysis.