Economics and Philosophy, 23 (2007) 163–183 Copyright C  Cambridge University Press doi:10.1017/S0266267107001356 PHILOSOPHICAL PROBLEMS IN COST–BENEFIT ANALYSIS SVEN OVE HANSSON Royal Institute of Technology, Stockholm Cost–benefit analysis (CBA) is much more philosophically interesting than has in general been recognized. Since it is the only well-developed form of applied consequentialism, it is a testing-ground for consequentialism and for the counterfactual analysis that it requires. Ten classes of philosophical problems that affect the practical performance of cost–benefit analysis are investigated: topic selection, dependence on the decision perspective, dangers of super synopticism and undue centralization, prediction problems, the indeterminateness of our control over future decisions, the need to exclude certain consequences for moral reasons, bias in the delimitation of consequences, incommensurability of consequences, difficulties in defending the essential requirement of transferability across contexts, and the normatively questionable but equally essential assumption of interpersonal compensability. 1. INTRODUCTION Cost–benefit analysis (CBA) is a collection of decision-aiding techniques that have in common the numerical weighing of advantages against disadvantages. In a typical CBA, two or more options in a public decision are compared to each other by careful calculation of their respective consequences. These consequences can be different in nature, e.g. economic costs, risk of disease and death, environmental damage etc. In the final analysis, all such consequences are assigned a monetary value, and the option with the highest value of benefits minus costs is recommended or chosen. Cost–benefit analysis is built on a very sound fundamental principle: advantages should be weighed against disadvantages, costs against benefits. However, many steps are needed to take us from this basic 163