scholarly journals Dynamic Benefit-Cost Analysis for Uncertain Futures

2019 ◽  
Vol 10 (2) ◽  
pp. 206-225 ◽  
Author(s):  
Susan E. Dudley ◽  
Daniel R. Pérez ◽  
Brian F. Mannix ◽  
Christopher Carrigan
Keyword(s):  
Cost Analysis ◽  
Network Effects ◽  
Global Scale ◽  
Decision Makers ◽  
Essential Information ◽  
Benefit Cost Analysis ◽  
Trade Offs ◽  
Market Solutions ◽  
Benefit Cost ◽  
Policy Problems

Abstract“Uncertain futures” refers to a set of policy problems that possess some combination of the following characteristics: (i) they potentially cause irreversible changes; (ii) they are widespread, so that policy responses may make sense only on a global scale; (iii) network effects are difficult to understand and may amplify (or moderate) consequences; (iv) time horizons are long; and (v) the likelihood of catastrophic outcomes is unknown or even unknowable. These characteristics tend to make uncertain futures intractable to market solutions because property rights are not clearly defined and essential information is unavailable. These same factors also pose challenges for benefit-cost analysis (BCA) and other traditional decision analysis tools. The diverse policy decisions confronting decision-makers today demand “dynamic BCA,” analytic frameworks that incorporate uncertainties and trade-offs across policy areas, recognizing that: perceptions of risks can be uninformed, misinformed, or inaccurate; risk characterization can suffer from ambiguity; and experts’ tendency to focus on one risk at a time may blind policymakers to important trade-offs. Dynamic BCA – which recognizes trade-offs, anticipates the need to learn from experience, and encourages learning – is essential for lowering the likelihoods and mitigating the consequences of uncertain futures while encouraging economic growth, reducing fragility, and increasing resilience.

Accounting for the Distribution of Benefits and Costs in Benefit–Cost Analysis

2020 ◽  
pp. 1-21
Author(s):  
James K. Hammitt
Keyword(s):  
Cost Analysis ◽  
Decision Makers ◽  
Policy Choice ◽  
Alternative Evaluation ◽  
Benefit Cost Analysis ◽  
Transfer Programs ◽  
Net Benefits ◽  
Benefit Cost ◽  
Benefits And Costs

Abstract Benefit–cost analysis (BCA) is often viewed as measuring the efficiency of a policy independent of the distribution of its consequences. The role of distributional effects on policy choice is disputed; either: (a) the policy that maximizes net benefits should be selected and distributional concerns should be addressed through other measures, such as tax and transfer programs or (b) BCA should be supplemented with distributional analysis and decision-makers should weigh efficiency and distribution in policy choice. The separation of efficiency and distribution is misleading. The measure of efficiency depends on the numéraire chosen for the analysis, whether monetary values or some other good (unless individuals have the same rates of substitution between them). The choice of numéraire is not neutral; it can affect the ranking of policies by calculated net benefits. Alternative evaluation methods, such as BCA using a different numéraire, weighted BCA, or a social welfare function (SWF), may better integrate concerns about distribution and efficiency. The most appropriate numéraire, distributional weights, or SWFs cannot be measured or statistically estimated; it is a normative choice.

scholarly journals Prioritization of Low-Volume Road Projects Considering Project Cost and Network Accessibility: An Incremental Benefit–Cost Analysis Framework

2021 ◽  
Vol 13 (23) ◽  
pp. 13434
Author(s):  
Wubeshet Woldemariam
Keyword(s):  
Cost Analysis ◽  
Decision Makers ◽  
Performance Criteria ◽  
Project Cost ◽  
Benefit Cost Analysis ◽  
Incremental Benefit ◽  
Study Results ◽  
Road Projects ◽  
Low Volume ◽  
Benefit Cost

Due to insufficient funds to implement all candidate road infrastructure projects, there is a need to efficiently utilize available funds and select candidate projects that maximize performance criteria decision-makers. This paper proposes an incremental benefit–cost analysis (IBCA) framework to prioritize low-volume road (LVR) projects that maximize road network accessibility considering project cost and network accessibility requirements. The study results show that the accessibility benefits of road projects depend not only on their cost requirements but also on their spatial locations in the network that affect their network-level accessibility benefits per unit cost of investment. Additionally, the number of disrupted LVR links cannot fully determine the degree of change in network accessibility. The framework enables decision-makers to consider project cost requirements and the accessibility-related impacts of LVR projects, maximize economic benefits, and ensure the sustainability of the LVR network performance.

Benefit-Cost Analysis of Economic Resilience Actions

2017 ◽  
Author(s):  
Adam Rose
Keyword(s):  
Cost Analysis ◽  
Decision Makers ◽  
Economic Resilience ◽  
Public And Private ◽  
Benefit Cost Analysis ◽  
Comprehensive Benefit ◽  
Sector Decision ◽  
Public And Private Sector ◽  
Static Form ◽  
Benefit Cost

Economic resilience, in its static form, refers to utilizing remaining resources efficiently to maintain functionality of a household, business, industry, or entire economy after a disaster strikes, and, in its dynamic form, to effectively investing in repair and reconstruction to promote accelerated recovery. As such, economic resilience is oriented to implementing various post-disaster actions (tactics) to reduce business interruption (BI), in contrast to pre-disaster actions such as mitigation that are primarily oriented to preventing property damage. A number of static resilience tactics have been shown to be effective (e.g., conserving scarce inputs, finding substitutes from within and from outside the region, using inventories, and relocating activity to branch plants/offices or other sites). Efforts to measure the effectiveness of the various tactics are relatively new and aim to translate these estimates into dollar benefits, which can be juxtaposed to estimates of dollar costs of implementing the tactics. A comprehensive benefit-cost analysis can assist public- and private sector decision makers in determining the best set of resilience tactics to form an overall resilience strategy.

Developing Theoretical Foundations of DfM

2000 ◽  
Author(s):  
Jami J. Shah ◽  
Paul K. Wright
Keyword(s):  
Cost Analysis ◽  
Computational Cost ◽  
Ease Of Use ◽  
Value Engineering ◽  
Benefit Cost Analysis ◽  
Trade Offs ◽  
Function Domain ◽  
Market Factors ◽  
Benefit Cost ◽  
Theoretical Foundations

Abstract This work is motivated by a desire to put DfM on solid theoretical foundations. The paper evaluates measures of manufacturability and classes of DfM methods and frameworks independent of the specific manufacturing processes. Criteria used in evaluation include theoretical foundation, accuracy, flexibility in choosing utility/objective function, domain independence, ease of use, level and extent of information required, computational cost, ability to incorporate uncertainty and market factors. We introduce a DfM approach based on Benefit/Cost analysis. All design utilities are lumped into a single “Design Benefit (RD)”, all manufacturability factors into another parameter “Manufacturing Rating (RM)”, and then techniques of benefit-cost analysis and value engineering are used to make decisions about design improvements. Use of overall and marginal DfM ratings allows trade-offs to be made. Any set of desired objectives can be used for computing the ratings. It is also possible to incorporate design or manufacturing constraints.

Using STEAM for Benefit-Cost Analysis of Transportation Alternatives

1998 ◽  
Vol 1649 (1) ◽  
pp. 63-71 ◽  
Author(s):  
Patrick Decorla-Souza ◽  
Harry Cohen ◽  
Dan Haling ◽  
James Hunt
Keyword(s):  
Cost Analysis ◽  
Travel Demand ◽  
Demand Management ◽  
Decision Makers ◽  
Pollutant Emissions ◽  
Travel Demand Management ◽  
Benefit Cost Analysis ◽  
Wide Range ◽  
Surface Transportation ◽  
Benefit Cost

The Intermodal Surface Transportation Efficiency Act emphasizes assessment of multimodal alternatives and demand management strategies. This emphasis has increased the need for planners to provide good comparative information to decision makers with regard to proposed alternative transportation solutions. Benefit-cost analysis is a useful tool to compare the economic worth of alternatives and evaluate tradeoffs between economic benefits and nonmonetizable social and environmental impacts. FHWA has developed a new tool for benefit-cost analysis called the Surface Transportation Efficiency Analysis Model (STEAM). The software is based on the principles of economic analysis and allows development of monetized impact estimates for a wide range of transportation investments and policies, including major capital projects, pricing, and travel demand management. Impact measures are monetized to the extent feasible, and quantitative estimates of natural resource usage (e.g., energy consumption) and environmental impact (e.g., pollutant emissions) are also provided. Decision makers can then use net monetary benefits (or costs) of alternatives as computed by STEAM to evaluate tradeoffs against nonmonetizable impacts. The software was applied in evaluation of corridor alternatives for the Central Freeway corridor in the hypothetical urban area of Any City, U.S.A.

VP36 Benefit Cost Analysis Of Electronic Claims Processing System In Ghana

2018 ◽  
Vol 34 (S1) ◽  
pp. 168-169
Author(s):  
Rebecca Addo ◽  
Justice Nonvignon ◽  
Huihui Wang
Keyword(s):  
Health Insurance ◽  
Cost Analysis ◽  
Health System ◽  
Decision Makers ◽  
Total Cost ◽  
Benefit Cost Analysis ◽  
Provider Payment ◽  
Study Population ◽  
Benefit Cost ◽  
Electronic Processing

Introduction:Since the inception of the Ghana National Health Insurance Scheme (NHIS), it has been pursuing a number of provider payment mechanisms that could not only control the continuous escalating costs of claims payout, but also facilitate the claims processing time. In lieu of this, electronic processing of claims (E-claims) was introduced in 2013 as part of the World Bank supported Health Insurance project that sought to facilitate the financial and operational management of the NHIS. It was piloted in 29 health facilities up to March 2014. They reported cost savings made by the NHIS using E-claims, creating interest in scaling it up. However, the comparative effectiveness and cost effectiveness of E-claims to the health system compared to manual claims processing is unknown. Therefore, to provide decision makers with the appropriate information to choose between manual and E-claims processing, this study sought to evaluate the cost-benefit of E-claims.Methods:A benefit-cost analysis was used to evaluate the efficiency of E-claims from the perspective of the health system. Health providers and the purchaser (NHIS claims processing center) were the study population. Resource use and costs were obtained from the study population. The volumes and values of claims reimbursed and the claims rejection rate were used as the benefits of claims processing. The incremental benefit-cost ratio (IBCR) was estimated for the provider, purchaser and the entire health system. Analysis was conducted in Microsoft Excel.Results:The total cost per claim for providers were USD 1,177.04 and USD 1,240.65 for E-claims and paper claims respectively. The total cost per E-claims and paper claims for the purchaser were 592.17 and 502.19 respectively. Total benefit per E-claim and paper claim processing for the providers were USD 8,562.90 and USD 8,888.37 respectively while that for the purchaser was USD 11,037.62 and USD 8,737.60 respectively. Processing claims electronically led to incremental gains by both providers and purchasers. Providers gained additional USD 2008.51 while the purchaser gained USD 2,300.02. The IBCR was estimated at −19.75, 25.56 and 5.10 for all providers, purchaser and both providers and purchaser of the health system respectively. Thus the IBCR was less than 1for the providers and more than 1 for purchaser and both purchaser and providers.Conclusions:The electronic processing of claims is more efficient compared to manual processing in the Ghana NHIS. This provides decision makers with evidence for scaling it up to all the facilities in Ghana.

scholarly journals Towards Principles and Standards for the Benefit-Cost Analysis of Safety

2011 ◽  
Vol 2 (3) ◽  
pp. 1-25 ◽  
Author(s):  
Scott Farrow ◽  
W. Kip Viscusi
Keyword(s):  
Cost Analysis ◽  
Community Of Practice ◽  
Public Safety ◽  
Decision Makers ◽  
Benefit Cost Analysis ◽  
The Public ◽  
Welfare Measures ◽  
Principles And Standards ◽  
Uncertain Outcomes ◽  
Benefit Cost

Benefit-cost analysis (BCA) is frequently applied to decisions involving public safety which requires analyzing risk and assessing options to manage risks. Principles and standards may assist analysts, decision-makers, and the public in developing and interpreting such BCAs. Principles and standards at best represent commonly held views among a community of practice. Such views are continually evolving with advances in the field. This paper presents a modularized format towards principles and standards that may assist in focusing discussion and decisions about whether such proposals actually reflect principles and standards within the benefit-cost analysis community of practice. Among topics covered are welfare measures, benefit or cost transfer, and valuing uncertain outcomes.

A Normative DFM Framework Based on Benefit-Cost Analysis

2002 ◽  
Author(s):  
Zuozhi Zhao ◽  
Jami Shah
Keyword(s):  
Cost Analysis ◽  
Ad Hoc ◽  
Manufacturing Cost ◽  
Net Benefit ◽  
Rating Systems ◽  
Benefit Cost Analysis ◽  
Trade Offs ◽  
Design Attributes ◽  
Benefit Cost ◽  
Domain Independent

Design for Manufacturing (DfM) involves trade-offs between design objectives and manufacturing cost/efficiency. However, contemporary software packages consider DfM in a unilateral (manufacturing centric) way. Ad-hoc rating systems used in these packages can lead to bad decisions. Also, uncertainty in estimating design attributes and manufacturing costs must be accounted for. This paper presents a theoretical framework for DfM that incorporates the above factors. The applicability and rationality of Benefit-Cost analysis to DfM is demonstrated. Present value of net benefit is proposed as the only rational measure of DfM. A domain independent shell for DfM analysis is developed. The shell can be customized for evaluating both technical feasibility and economics of manufacturing.

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