Cost-Benefit Analysis in the United States

Cost-Benefit Analysis (Economics Term) in the Federal Budget Process

Meaning of Cost-Benefit Analysis in the congressional and executive budget processes (GAO source): An analytic technique that compares the costs and benefits of investments, programs, or policy actions in order to determine which alternative or alternatives maximize net benefits (economic efficiency). Cost-benefit analysis attempts to consider all costs and benefits to whomever they accrue, regardless of whether they are reflected in market transactions. The costs and benefits included depend upon the scope of the analysis, although the standard federal analysis is national in scope. Net benefits of an alternative are determined by subtracting the present value of costs from the present value of benefits. (See also Present Value.)

Resources

See Also

• Federal Appropriations
• Entries about the United States Budget Process in the Encyclopedia (including Cost-Benefit Analysis)
• Public Debt

Further Reading

• Legislatures and the budget process: the myth of fiscal control

  (J Wehner, 2010)

• Reconcilable Differences?: Congress, the Budget Process, and the Deficit (JB Gilmour, 1990)
• Fiscal institutions and fiscal performance

  (JM Poterba, J von Hagen, 2008)