Embedding (some) benefit-cost concepts into decision support processes with deep uncertainty

Lempert Robert J. ()
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Lempert Robert J.: Rand Corporation, Santa Monica, CA 90401, USA

Journal of Benefit-Cost Analysis, 2014, vol. 5, issue 3, 487-514

Abstract: Benefit-cost analysis (BCA) aims to help people make better decisions. But BCA does not always serve this role as well as intended. In particular, BCA’s aim of aggregating all attributes of concern to decision makers into a single, best-estimate metric can conflict with the differing world views and values that may be an inherent characteristic of many climate-related decisions. This paper argues that new approaches exist that can help reduce the tension between the benefits of providing useful, scientifically based information to decision makers and the costs of aggregating uncertainty and differing values into single best estimates. Enabled by new information technology, these approaches can summarize decision-relevant information in new ways. Viewed in this light, many limitations of BCA lie not in the approach itself, but with the way it is used. In particular, this paper will argue that the problem lies in a process that begins by first assigning agreed-upon values to all the relevant inputs and then using BCA to rank the desirability of alternative decision options. In contrast, BCA can be used as part of a process that begins by acknowledging a wide range of ethical and epistemological views, examines which combinations of views are most important in affecting the ranking among proposed decision options, and uses this information to identify and seek consensus on actions that are robust over a wide range of such views.

Keywords: deep uncertainty; multi-attribute decision making; resilient infrastructure; robust decision making; sea level rise (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1515/jbca-2014-9006

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