Social benefit-cost analysis and the distribution of income

Abstract

Abstract Starting from the premise that, in cost-benefit analysis, the net benefits of the poor should be given greater weight, the influence of these distributional considerations on the social evaluation of investment projects is examined. It is argued that the chief impact of distributional considerations is on the costing of labour, the measurement of benefits from public goods, and the pricing of non-traded goods. The last is, in principle, the most important; but, as is explained, the correct way of adjusting prices is complicated and difficult to assess. It is by no means as easy as is often thought to identify the projects that will do most for the poor.