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Licensed Unlicensed Requires Authentication Published by De Gruyter November 22, 2013

How (Not) to Lie with Benefit-Cost Analysis

  • Scott Farrow

    Scott Farrow is the former Chief Economist of the U.S. GAO, editor of the Journal of Benefit-Cost Analysis and Professor of Economics at UMBC, a part of the University System of Maryland.

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From the journal The Economists’ Voice


Benefit-cost analysis is the applied side of welfare economics. Its broad use in support of public decisions draws both detractors and defenders. This tongue-in-cheek piece demonstrates that knowing how to lie provides insights into how not to lie; we assume the former is always accidental among economists and we hope it is so for others.

Corresponding author: Scott Farrow, UMBC – Economics, 1000 Hilltop Circle PUP 334 Baltimore, MD 21250, USA, Tel.: +410-455-5922, e-mail:

About the author

Scott Farrow

Scott Farrow is the former Chief Economist of the U.S. GAO, editor of the Journal of Benefit-Cost Analysis and Professor of Economics at UMBC, a part of the University System of Maryland.

  1. 1

    US Government Accountability Office. 2002. Oregon Inlet Jetty Project. GAO-02-803.

  2. 2

    EPA, Office of Solid Waste and Emergency Response, 2009. “Summary of Key Existing EPA CERCLA Policies for Groundwater Restoration,” OSWER Directive 9283. 1–33, June 26, 2009; EPA, Proposed Arsenic in Drinking Water Rule, Regulatory Impact Analysis, EPA 815-R-00-013.

  3. 3

    See retrospective cost and benefit reports on the Clean Water Act available at: or the discussion of recent air pollution rules in OMB, OIRA “2012 Annual Report to Congress on the Costs and Benefits of Federal Regulation and Unfunded Mandates on State, Local, and Tribal Entities.”

  4. 4

    Gayer, T. and W. K. Viscusi, “Overriding Consumer Preferences with Energy Regulations,” Journal of Regulatory Economics 43, no. 3, (2013), 248–264.

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    Hamilton, J. 2011. “Costs and Benefits of the Keystone Pipeline” with comments and source reports cited therein, Econbrowser available at

  6. 6

    Greenberg, D., V. Deitch, and G. Hamilton, “A Synthesis of Random Assignment Benefit-Cost Studies of Welfare to Work Programs,” Journal of Benefit-Cost Analysis 1, no. 1, (2010), 3.

  7. 7

    Hassenzahl, David, “Implications of Excessive Precision for Risk Analysis: Evidence from the Last Four Decades,” Risk Analysis 26, no. 1, (2006), 266–276.

  8. 8

    Some sources identified under “How to Lie” are summarizing other documents related to the topic.

  9. 9

    Independent Levee Investigation Team, 2006, “Investigation of the Performance of the New Orleans Flood Protection System” (Chapter 15) available at

  10. 10

    Southwell, C. and D. VonWinterfedlt, “A Decision Analysis of Options to Rebuild New Orleans,” in Natural Disaster Analysis After Hurricane Katrina: Risk Assessment, Economic Impacts and Social Implications, ed. H. Richardson, Gordeon P., and J. Moore. (Cheltenham: Edward Elgar, 2009).

  11. 11

    Coates, D., “Stadiums and Arenas: Economic Development or Economic Redistribution?” Contemporary Economic Policy 25, no. 4, (2007), 565–577.

  12. 12

    Department of Health and Human Services, Centers for Medicare and Medicaid. “Fire Safety Requirements for Long-Term Care Facilities,” Federal Register 71, no. 208, (2006), 62957–62971. (A later analysis was an improvement).

  13. 13

    Wolshon, B., “Evacuation Planning and Engineering for New Orleans.” The Bridge (National Academy of Engineering) 36, no. 1, (2006), 27–34.

  14. 14

    Lutter, R., “Regulatory Policy: What Role for Retrospective Analysis?” Journal of Benefit-Cost Analysis 4, no. 1, (2013), 17–38.


Arrow, Kenneth, Maureen Cropper, George Eads, Robert Hahn, Lester Lave, Roger Knoll, Paul Portney, Milton Russell, Richard Schmalensee, V. Kerry Smith, and Robert Stavins. 1996. “Is There a Role for Benefit – Cost Analysis in Environmental, Health, and Safety Regulation?” Science 272 (April): 221–222.Search in Google Scholar

Boardman, Anthony, David Greenberg, Aiden Vining, and David Weimer. 2011. Cost-Benefit Analysis: Concepts and Practice. Upper Saddle River: Pearson-Prentice Hall.Search in Google Scholar

Farrow, Scott, Ed. The Journal of Benefit-Cost Analysis. Available at in Google Scholar

Farrow, Scott and Richard Zerbe, eds. 2013. Principles and Standards for Benefit-Cost Analysis. Cheltenham, UK: Edward Elgar.10.4337/9781782549062Search in Google Scholar

Harrington, Winston, Lisa Heinzerling and Richard Morgenstern, eds. 2009. Reforming Regulatory Impact Analysis. Washington, D.C.: Resources for the Future.10.4324/9781936331260Search in Google Scholar

Office of Management and Budget, Office of Information and Regulatory Affairs, 2013. Annual Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local and Tribal Entities.Search in Google Scholar

Published Online: 2013-11-22
Published in Print: 2013-12-01

©2013 by Walter de Gruyter Berlin Boston

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