Barriers to the use of cost-benefit analyses

In the thematic network ROSEBUD, an attempt was made to describe potential barriers to the use of cost-benefit analysis of road safety measures [17]. The following list of potential barriers, arranged from the more basic to the more superficial was developed.

A Fundamental barriers (barriers of a philosophical nature)

A1 Rejecting the principles of welfare economics

A2 Rejecting efficiency as a relevant criterion of desirability

A3 Rejecting the monetary valuation of risk reductions

B Institutional barriers (barriers related to the organisation of policy making)

B1 Lack of consensus on relevant policy objectives

B2 Formulation of policy objectives inconsistent with cost-benefit analysis

B3 Priority given to policy objectives unsuitable for cost-benefit analysis

B4 Horse trading/vote trading

B5 Political opportunism

B6 Unfunded mandates and excessive delegation of authority

B7 Abundance of resources

B8 Rigidity of reallocation mechanisms

B9 Wrong timing of EAT information in decision-making process

C Technical/methodological barriers (barriers related to inherent elements of the efficiency assessment tools)

C1 Lack of knowledge of relevant impacts

C2 Inadequate monetary valuation of relevant impacts

C3 Indivisibilities

C4 Inadequate treatment of uncertainty

D Barriers related to the implementation of cost-effective policy options

D1 Social dilemmas

D2 Lack of power (related to B6 above)

D3 Vested interests in road safety measures

D4 Lack of incentives to implement cost-effective solutions

D5 Lack of marketing of efficient policies

Each of these potential barriers will not be discussed in detail. It was found that institutional barriers are often important. The framework of policy making is such that solutions to problems are not developed primarily with the aid of a technical analysis, like a cost-benefit analysis, but by means of a process of negotiations. As an example, resource allocation in the public sector in Norway is strongly influenced by game-like mechanisms that result in inefficient allocations, i.e. an abundance of resources in some areas and a shortage of resources in other areas. The result of this is that areas with abundant resources spend these resources on projects that are not cost effective, whereas areas with a shortage of resources are unable to implement all cost-effective projects.

It is, however, outside the scope of cost-benefit analysis as such to alter these resource allocation mechanisms. Considerations relevant to the implementation of policies based on cost-benefit analyses are discussed in section 9.