Social cost-benefit analysis in practice: Some reflections in the light of case studies using Little-Mirrlees techniques

This paper reviews case studies of SCBA using Little-Mirrlees methodology, in the light of earlier criticisms of the method. Two classes of criticisms are considered — first-order or transcendental, and second-order or immanent. While there were many differences between the case studies, it was found that with respect to second-order criticisms some (but not all) of the suggested pitfalls had been avoided in the best studies. But the first-order criticisms remained of fundamental importance in shedding doubt on the basis of SCBA: in particular this applied to the definition and derivation of social objectives, to the political economy of decision-making and to the question of factors making for dynamic versus static allocational efficiency.