Abstract
This paper argues that the consistent application of benefit-cost analysis (BCA) is likely to enhance the well-being of all. Thus, the justification for its use in policy making lies directly in the Pareto test. The Pareto justification stems from a decision-rule perspective across a portfolio of projects. We call this perspective Pareto Relevance. Pareto Relevance is achieved by adopting all projects with positive net benefits, considering in principle all economic goods as valued in a methodologically appropriate BCA. We demonstrate that Pareto Relevance provides a sounder basis for the use BCA than does the potential compensation test.
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