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Assessing the Distribution of Impacts

2018

This paper discusses the need to supplement benefit-cost analysis with estimates of how the impacts are distributed across different members of the population, categorized by income level or other attributes. Benefit-cost analysis focuses on estimating aggregate net effects. Decision-makers and other stakeholders also want to know who is harmed, who is helped, and by how much. Responding to these questions requires identifying the characteristics of individuals and impacts of concern, examining how the benefits and costs are distributed across individuals grouped by these attributes, then reporting the results for consideration by decision-makers. Standard metrics can be used to measure the inequality of these impacts, such as the Gini coefficient, concentration index, or Atkinson index. The analysis can also be conducted with distributional weights or using social-welfare functions to represent preferences for both the level and distribution of wellbeing.

 

Source:

Robinson LA, Hammitt JK, Adler M. Assessing the Distribution of Impacts in Global Benefit-Cost Analysis. Guidelines for Benefit-Cost Analysis Project Working Paper No. 3, 2018. https://media.repository.chds.hsph.harvard.edu/static/filer_public/89/af/89af6685-b99c-42dc-946e-ac115ef4f852/2018_robinson_impact_glob_bca_bca_prj_wp_33.pdf