Quantitative Cost-benefit Analysis Research Articles

A Qualitative Cost-Benefit Analysis of the Maritime Silk Road in Europe: Who Benefits from the Initiative and Who Does Not

Abstract: China has traditionally been regarded as a continental power. However, the 21st Century Maritime Silk Road (MSR), launched in 2013, shapes China's intention to become a global maritime power. The initiative is the most significant contribution to increasing global maritime connectivity in recent decades. The volume and impact of Chinese investments in Europe's seaports are remarkable. This article proposes a fundamental framework to assess who benefits from the initiative. Since quantitative cost-benefit analyses (CBA) hardly apply to multifaceted and partially unquantifiable phenomena, we suggest assessing the MSR by means of a comprehensive qualitative CBA. We opted for a qualitative CBA due to ontological and epistemological reasons: on the one hand, the complex and multilayered nature of the problem is difficult to monetize, and, on the other hand, our argument is not final, as it attempts to assess a given policy before its implementation is sufficiently mature. In this vein, we apply the problem-solving methodology 'analytic hierarchy process'. While the media have disproportionately stressed the negative effects of the MSR, we conclude under this framework that (i) for China, MSR benefits largely outweigh associated costs; (ii) for participating countries, MSR benefits outweigh the associated costs only after cost-mitigating measures are incorporated; and (iii) for non-participating countries, MSR costs outweigh associated benefits.

Solar-Powered LVDC Nano-Grid with Smart FPGA-based Residential Power Switching Algorithm

A Low Voltage Direct Current (LVDC) nano-grid opens new potentials for the electrification of isolated rural settlements, urban residential structures, and the existing grid infrastructure. This study introduces and examines the Power-Sharing Control (PSC) of a solar Photovoltaic (PV) system connected to a low-voltage DC nano-grid. Effective control and power management between the components of a planned LVDC nano-grid system are presented, as is the use of a PSC algorithm implemented on a Field Programmable Gate Array (FPGA). General simulation investigations are tested to analyse the system’s performance using the recommended controller. The proposed LVDC nano-grid idea is developed, and its hardware is assessed. The results of the hardware under different settings are shown and discussed. The proposed nano-grid model is implemented in matrix laboratory (MATLAB)-Simulink and has an FPGA-based Maximum Power Point Tracking (MPPT) controller and a central PSC algorithm; simulation studies are performed, and results are achieved. 100 <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">W</i> nano-grid hardware is set up and tested. Quantitative cost-benefit analyses of the LVDC nano-grid of the proposed controller are given.

Disclosure regulation, cost of capital, and firm values

This paper shows that mandating some firms to disclose more while leaving other firms disclosing voluntarily is less effective in improving and may even harm the overall information environment when firms' disclosures are endogenous. Although the regulated firms' increased disclosure directly reduces all firms' cost of capital, it crowds out the unregulated firms' voluntary disclosure and thus increases all firms’ cost of capital indirectly. Under certain circumstances, the negative indirect effect can outweigh the direct benefit. These results are consistent with the scant evidence on the cost-of-capital effect of mandatory disclosure. The model highlights the importance of the market-wide effects of disclosure regulation and facilitates quantitative cost-benefit analyses for specific regulatory proposals.

Do Administrative Procedures Fix Cognitive Biases?

Abstract This article uses survey experiments to assess whether administrative procedures fix cognitive bias. We focus on two procedural requirements: qualitative reason-giving and quantitative cost-benefit analysis (CBA). Both requirements are now firmly entrenched in the U.S. federal regulation-making. Multilateral organizations such as the World Bank, OECD, and EU have encouraged their broad diffusion across many national contexts. Yet CBA, in particular, remains controversial. Supporters of CBA claim it leads to more rational regulation, with Sunstein (2000) asserting that CBA can reduce cognitive biases. By contrast, we argue that procedures should be conceptualized as imperfect substitutes subject to diminishing marginal benefits. To test and illustrate this argument, we examine how each procedure individually and cumulatively modulates gain–loss framing, partisan-motivated reasoning, and scope insensitivity in a nationally representative sample. We find that one or both procedures decreased cognitive bias. CBA was the most helpful against partisan reasoning whereas reason-giving did little. Both procedures seem comparably effective against the other biases, although in each case only one of the two procedures produced reductions distinguishable from zero. We only find substantial synergies between the two procedures with respect to gain–loss framing. For the other biases, the combination of both procedures did not generate significant reductions over and above that achieved by the more effective procedure alone. We hypothesize that procedures will only fix cognitive biases if they disrupt bias-inducing mental processes, and we reconcile this proposition with our findings. We conclude by relating our framework to debates about the design of administrative procedures and describe a research agenda based upon rationality-improving procedures.

Benefits of Advanced Air Mobility for Society and Environment: A Case Study of Ohio

Advanced Air Mobility (AAM) is an emerging transportation system that will enable the safe and efficient low altitude operations and applications of unmanned aircraft (e.g., passenger transportation and cargo delivery) in the national airspace. This system is currently under active research and development by NASA in collaboration with FAA, other federal partner agencies, industry, and academia to develop its infrastructure, information architecture, software functions, concepts of operation, operations management tools and other functional components. Existing studies have, however, not thoroughly analyzed the net positive impact of AAM on society and environment to justify investments in its infrastructure and implementation. In this work, we fill this gap by evaluating the non-monetary social impact of AAM in the state of Ohio for passengers, patients, farmers, logistics companies and their customers and bridge inspection entities, as well as its environmental impact, by conducting a thorough data-driven quantitative cost–benefit analysis of AAM from the perspective of the state government. To this end, the most relevant and significant benefit and cost factors are identified, monetized, and estimated. Existing ground transportation for the movement of passengers and goods within and across urban areas is considered as the base case. The findings demonstrate that AAM’s benefits are large and varied, far outweighing its costs. Insights on these benefits can help gain community acceptance of AAM, which is critical for successful implementation of AAM. The findings support decision-making for policymakers and provide justification for investments in AAM infrastructure by the government and private sector.

Quantitative Cost-Benefit Analysis of Direct Disposal and Pyroprocessing in Korea’s Nuclear Fuel Cycle

The purpose of this study is to compare the economic viability of direct disposal and pyroprocessing. This is because the selection of an alternative cannot be justified without a guarantee of economic feasibility. This paper sets the KRS (Korea Reference System) spent fuel repository and KAPF+ (Korea Advanced Pyroprocess Facility plus) as the cost objects, administers a cost-benefit analysis, and presents the results on the net cost. The results of the calculation demonstrate that the net costs of direct disposal and pyroprocessing are USD 17,719,319,040 and USD 19,329,252,755, respectively. The difference in the net cost for the two alternatives is thus not insignificant. However, the economic viability of direct disposal was found to be superior compared to that of pyroprocessing. In the end, it was found that the operating and maintenance cost of a pyroprocessing facility is comparatively high. Accordingly, direct disposal costs less than pyroprocessing. The direct disposal option is advantageous in terms of economical nuclear power sustainability.

Regulation and Redistribution with Lives in the Balance

A central question in law and economics is whether non-tax legal rules should be designed solely to maximize efficiency or whether they also should account for concerns about the distribution of income. This question takes on particular importance in the context of cost-benefit analysis. Federal agencies apply cost-benefit analysis when writing regulations that generate multibillion dollar impacts on the US economy and profound effects on millions of Americans’ lives. In the past, agency cost-benefit analyses typically have ignored the income-distributive consequences of those regulations. That may soon change: On his first day in office, President Biden instructed his Office of Management and Budget to propose procedures for incorporating distributive considerations into cost-benefit analysis, thus bringing renewed relevance to a long-running law-and-economics debate. This article explores what it might mean in practice for agencies to incorporate distributive considerations into cost-benefit analysis. It uses, as a case study, a 2014 rule promulgated by the National Highway Traffic Safety Administration (NHTSA) requiring new motor vehicles to have rearview cameras that reduce the risk of backover crashes. As with most major federal regulations that impose large dollar costs, the principal benefit of the rear visibility rule is a reduction in premature mortality. Quantitative cost-benefit analysis typically translates mortality reductions into dollar terms based on the “value of a statistical life,” or VSL. Any distributive evaluation of the rule will depend critically on a parameter known as the “income elasticity of the VSL,” which reflects the relationship between an individual’s income and her willingness to pay for mortality risk reductions. Although agency cost-benefit analyses use the same VSL for all individuals regardless of income, the Department of Transportation—of which NHTSA is a part—has issued guidance on the income elasticity of the VSL for other purposes. When this article applies the Department of Transportation’s income-elasticity guidance in its distributive analysis, the rear visibility rule appears to be “regressive”: it generates net costs for lower-income groups and net benefits for higher-income groups. Rerunning the distributive analysis with equal dollar VSLs at all income levels, the rule appears to be “progressive”: lower-income individuals are the primary beneficiaries and higher-income individuals are the losers. The article goes on to explain why assumptions about the relationship between income and the VSL will have important implications for distributive analyses of other lifesaving regulations. The article then asks what agencies ought to do: should they incorporate distributive objectives into cost-benefit analysis by assigning greater weight to dollars in lower-income individuals’ hands, and should they assign different dollar VSLs to individuals with different incomes? The two questions are closely linked. Incorporating distributive objectives into cost-benefit analysis of lifesaving regulations while maintaining equal dollar VSLs for rich and poor will potentially produce perverse outcomes that—according to standard economic thinking—actually redistribute from poor to rich. After canvassing options, this article ultimately concludes that the status quo approach—equal weights for low-income and high-income individuals’ dollars, equal dollar VSLs for low-income and high-income individuals—makes practical sense in light of expressive concerns, informational burdens, and institutional constraints. The article ends by reflecting on the case study’s lessons for broader debates over legal system design, and it explains why the issues that arise in the rear visibility case study are likely to affect other efforts to redistribute through non-tax legal rules.

A Benefits Prioritization Analysis on Adopting BIM Systems Against Major Challenges in Megaproject Delivery

Purpose: This article presents a recent research and development experiment on benefits analysis for adopting building information modeling/management (BIM) systems in megaproject delivery across work stages with regard to the needs of project stakeholders. It focuses on a new approach to benefits prioritization to support decision making against major challenges in megaproject delivery. Methodology: The study was underpinned by an extensive literature review on relevant research and practices across the world, and a questionnaire-based survey on the benefits from adopting BIM in megaproject delivery in Australia. In addition, this study yields new tools for value analysis with regard to the adoption of BIM systems in megaproject delivery, and this include a new calculation method for benefits prioritization, and a new value compass tool to support decisions making on BIM adoption. Findings: Through the extensive literature review that covers multidisciplinary areas relating to the use of BIM, a set of generic hypotheses was formulated on the comparative level of technical value that various stakeholder groups are expected to achieve from adopting BIM systems in megaproject delivery. These hypotheses were tested by using the questionnaire-based survey. A new benefits prioritization approach was developed to identify the key benefits of BIM systems in megaproject delivery. In addition, a compass tool was also developed to visualize the status of value achievement across project stakeholders in dealing with major challenges in megaproject delivery. Implications for Research and Practices: By using data collected from the Australian megaproject sector in addition to academic review in Australia, China, and United Kingdom, this experimental study revealed current professional perceptions on the benefits of adopting BIM systems in megaproject delivery in comparison with data and information reported by professionals concerning the adoption of BIM systems from both generic and specific point of view across multiple megaproject stakeholders. Value: This article provides useful information for both academic research and practical services in the context of quantitative Cost-Benefit Analysis (CBA) on the adoption of BIM systems in megaproject delivery when major challenges on professional competence, budget, schedule and sustainability need to be seriously dealt with. Findings from this experimental study can inform value engineering practice at both strategic and tactic level with regard to adopting BIM systems in megaproject delivery.

Are intra- and inter-basin water transfers a sustainable policy intervention for addressing water scarcity?

Water scarcity affects many countries around the world, and increases in severity over time as populations grow and climate change further intensifies. Governments and water regulators address increased water scarcity in a regional setting by introducing policy interventions, including non-structural, such as pricing mechanisms and quotas to affect demand, and supply management means, such as water storage and extraction. One of the most extreme policy interventions is to build infrastructure to move water from locations where it is abundant to locations facing scarcity. Such interventions are known as intra- and inter-basin transfers (IBTs) of water and have been quite frequently practiced in many river basins around the world in recent years. In moving water from one place to another benefits and costs are realized, some of which are private and some are public in nature. The objective of this paper is to discern whether or not the documented IBTs have been sustainable in addressing scarcity. Since very few quantitative cost benefit analyses are available for IBTs, we apply a variation of the QUAlitative Structural Approach for Ranking (QUASAR) method to 121 studies of documented IBTs within 40 territories and basins around the world, using five attributes of impact that were found to be associated with the transfers. Our findings suggest that the majority of the IBTs have been associated with overall negligible or negative impacts on the water-exporting regions, the water-transmitting regions, or the water-importing regions within the basins studied. Our findings also suggest that IBTs that were meant to relieve higher levels of water scarcity in the importing regions might be more prone to overall negative impacts.

Astrophysical science metrics for next-generation gravitational-wave detectors

The second generation of gravitational-wave (GW) detectors are being built and tuned all over the world. The detection of signals from binary black holes is beginning to fulfil the promise of GW astronomy. In this work, we examine several possible configurations for third-generation laser interferometers in existing km-scale facilities. We propose a set of astrophysically motivated metrics to evaluate detector performance. We measure the impact of detector design choices against these metrics, providing a quantitative cost-benefit analyses of the resulting scientific payoffs.

Quantitative regulatory impact analysis: Experience of regulatory agencies in Brazil

This research considers the experience of Brazilian agencies with the application of complex Regulatory Impact Analysis (RIA) using based on quantitative methods of cost-benefit analysis. Public consultations with regulatory agencies were held to verify how the agencies have applied RIA. The collection of documents and information allows us to conclude that Brazilian agencies have little or no experience in conducting RIA with quantitative cost-benefit analysis.

The Importance of ‘Blue Shirts’ in Traffic Policing

Abstract The requirement for transparency and accountability for public spending has seen a focus on quantitative cost–benefit analyses. In the context of traffic policing, the temptation is to emphasize the importance of automated systems of enforcement as these pose an arguably less expensive alternative to using uniformed police. In the context of speed enforcement, automated means of enforcement are a logical way to efficiently distribute resources. However, in other areas of traffic policing, like driver distraction, seatbelt use, random breath testing, the use of uniformed police is essential. Following an overview of empirical research examining traffic enforcement, this article explores theoretical explanations for compliance with the law, focusing on research that has examined the importance of procedural justice. It is suggested that an approach embracing both automated means of enforcement coupled with visible police presence is essential to encourage perceptions of procedural justice and police legitimacy. Further empirical research is needed to model the ideal allocation of funding across automated and non-automatic law enforcement in traffic to maximize public compliance with the law and ultimately reduce crashes.

Systematic Underinvestment in the Global Space Sector: An Explanation and Potential Remedies

This article introduces a simple game-theoretic model to explain how policymakers' decisions may result in underinvestment in the global space sector. Because of international spillovers, policymakers can arrive at a globally suboptimal Nash equilibrium. We then show that policymakers may achieve optimal outcomes by focussing on international, rather than domestic space projects. Next, we introduce time dynamics to enhance the model's realism and show that improving quantitative cost-benefit analysis methods may further remedy underinvestment, as policymakers can overcome the influence of international spillovers and reach the optimal outcome by assigning higher values to future payoffs. However, when we modify the traditional iterated prisoner's dilemma to more accurately represent space sector funding dynamics, we find further evidence for a propensity to underinvest. As such, we show that the dynamic game solution is imperfect: democratic policymakers are inherently constrained by electoral cycles and future payoffs from space programs that tend to be difficult to predict, especially when compared to more traditional public policy programs. We recommend that governments should support private companies in the space sector to benefit from the comparative advantages they offer.

Streamlining or watering down? Assessing the 'smartness' of policy and standards for the promotion of low and zero carbon homes in England 2010–15

The knowledge and enforcement problems faced by governments in defining traditional ‘command and control’ regulation are well known. Significant legal scholarship offers alternative models of ‘smart,’ ‘responsive’ environmental regulation, emphasising the need for policy instrument mixes, including the vital role of voluntary, industry-led sustainability standards. Yet, as is being increasingly recognised, these contributions leave open the need for detailed, qualitative evaluation of instrument mixes as a complement to primarily quantitative cost-benefit analyses that predominate in regulatory impact assessments by governments. Addressing this need, this paper evaluates policy and standards for low and zero carbon homes in England during the Coalition government (2010–2015) when the ecological modernisation discourse of the previous New Labour government became subsumed by a deregulation agenda. Our study, incorporating 70 stakeholder interviews, suggests that, in supplier-driven markets such as housing in England, a ‘smart’ mix of mandatory and voluntary standards requires a strong, central role for government in setting national, mandatory standards and supporting their delivery. There is an important potential supplementary role for voluntary tools and local authority discretion, though our study highlights problems that can arise when such different instruments promote diverging roadmaps towards a policy goal.

Cost-Benefit Analysis and Arbitrariness Review

When an agency fails to engage in quantitative cost-benefit analysis, has it acted arbitrarily and hence in violation of the Administrative Procedure Act? At first glance, the question answers itself: Congress sometimes requires that form of analysis, but if it has not done so, then agencies have discretion to proceed as they see fit. But as recent decisions suggest, the underlying issues are far more complicated than they seem. The central reason is that for all its limitations, cost-benefit analysis is the best available method for testing whether regulations increase social welfare. Whenever a statute authorizes an agency to consider costs and benefits, its failure to quantify them, and to weigh them against each other, requires a non-arbitrary justification. Potential justifications include the technical difficulty of quantifying costs and benefits; the relevance of values such as equity, dignity, and fair distribution; and the existence of welfare effects that are not captured by monetized costs and benefits. These justifications will often be sufficient. But in some cases, they are not, and agencies should be found to have acted arbitrarily in failing to quantify costs and benefits and to show that the benefits justify the costs.

Quantitative cost-benefit analysis for typhoon resilient housing in Danang city, Vietnam

Located in Central Vietnam, Da Nang city is experiencing rapid urbanization and development. In recent years, floods and storms have caused critical damage and losses to local communities and destroyed thousands of houses despite great efforts of local governments and agencies toward disaster risk reduction. Housing is one of the most vulnerable sectors to climate extremes, of which typhoons exhibit the greatest impact in comparison to other climate hazards. This paper examines the costs and benefits of applying typhoon resilient housing measures in Da Nang. The paper aims to test the hypothesis that using typhoon resilient housing has a positive economic return. The cost-benefit analysis (CBA) results show that the return on investment of typhoon resilient housing is positive when typhoon events occur early in the lifetime of the house, suggesting that the investment in typhoon resilient housing is economically desirable. The results from the research illustrate that positive returns exist in most of the scenarios tested, yet home owners are choosing not to make this investment. The findings have investigated the information asymmetry gap that exists between innovation and adoption and explores policy implications to reduce the gap.

Quantification and Assessment Method for a Company's Product Piracy Risks

Continuous globalization and consequent knowledge integration lead to drastically increasing risks of product piracy, which require further countermeasures, other than the reactive legal measures currently primarily employed. This paper addresses the risk quantification and assessment problem decision makers in industry, specifically engineering industry, are facing. The method introduced focuses on the identification of product portfolio and value chain risks and allows for the determination of the company specific risk situation. The deduction of combating strategy alternatives is combined with a novel quantitative cost-benefit analysis of protection mechanisms, which enables well-founded anti-counterfeit decision making. Video abstract [Display omitted]

Fast estimation of the equilibrium adsorption constants of ionic surfactants with account for ion-specific effects

Abstract Understanding the factors contributing to the adsorption of surfactants to interfaces, without the need to carry out lengthy and meticulous experiments on every new surfactant system, is a pressing need in both industrial and academic research. A large group of the most widely used surfactants have aliphatic chains for their hydrophobic tails. Yet the variations in the length of the tail, the nature of the hydrophilic group, and the nature of the counterion (for ionic surfactants) make the exact adsorption capacity hard to predict. We present here a simple procedure for the fast and accurate estimation of the adsorption capacity of this large collection of surfactants by parameterizing the separate contributions of their components. We report the determination of the contribution from the polar heads by a model where it is the only free parameter and linear fits to experimental data. Uncertainty from experimental variations is decreased by fitting the results to another linear dependence for a series of homologous surfactants with different tail lengths where the incremental contribution of the tail is well established. The contributions from eight different polar heads (DMPO, DEPO, SO4−, OH, COOH, COO−, NH3+, and N(CH3)3+) are tabulated, as are contributions from 15 counter-ions (for ionic surfactants). The results allow immediate estimation of the adsorption strength of nearly 300 surfactant systems, for many of which the adsorption constants are not known. Comparisons of the calculated constants of randomly selected surfactant systems against their experimentally measured values yielded deviations of only about 3.5 ± 2%. Such quick calculation of a surfactant's adsorption constant based only on its molecular structure is a powerful tool for quantitative screening and cost-benefit analysis of surfactants for designing many industrial processes, including flotation of mineral particles, pharmaceutical foam fractionation, and de-emulsification in the oil industry. We point out techniques for expanding this method to other types of surfactant systems as well.

The Convergence of Insurance with Banking and Securities Industries, and the Limits of Regulatory Arbitrage in Finance

This article examines the regulatory challenges raised by recent, overlooked changes in insurance markets that have led to a functional convergence between insurance and the broader financial sector.The law literature on financial regulation last addressed the issue of convergence over a decade ago, before the latest generation of market innovation and at a time when concern over systemic stability was not at the forefront. This article revisits the convergence phenomenon in the context of insurance, and does so by applying an analytical framework that distinguishes between two “boundary problems” that accompany all financial regulation. One problem concerns jurisdictional boundaries: to what degree does market integration require that diverse regulations be harmonized across jurisdictions? The other relates to definitional boundaries: within a given jurisdiction, how should distinctions be drawn among financial products and firms that have come to perform similar economic functions? Two conclusions follow from applying this framework that are in tension with the current thrust of policy as well as the literature. First, the Federal Insurance Office established by Dodd-Frank is inappropriately structured to leverage international harmonization agreements into domestic reforms, whereas the reverse orientation would be more effective. Second, frequent calls for more “functional regulation” fail to appreciate the subtle advantages of retaining formalistic legal definitions, even in the face of increasing economic convergence.At bottom, both boundary problems are a product of the possibility for regulatory arbitrage across jurisdictions or industry definitions, and the potential for a loosely regulated shadow finance sector to arise. Here, insurance is used as a case study to demonstrate that regulatory arbitrage can occur along a surprising number of fronts and is difficult to reliably estimate ex ante when formulating financial regulation. For this reason, the Article argues, scholarship that has proposed a requirement for financial regulators to perform a quantitative cost-benefit analysis as part of their rulemaking overestimates the benefits that such a procedure would provide in practice.

The Sixth Commissioner

The federal securities laws grant broad rulemaking authority to the Securities and Exchange Commission (SEC). In promulgating rules, the SEC must not only ensure that its rules protect investors and the public interest, but also consider the effects of its rules on efficiency, competition, and capital formation (the ECCF mandate).However, the SEC’s rulemaking authority has recently been frustrated. In two decisions striking down SEC rules, the D.C. Circuit held that the ECCF mandate requires a quantitative cost-benefit analysis. This contrasts with the SEC’s historic practice of qualitatively assessing the effects of its rules.While these D.C. Circuit decisions have been criticized for applying an inappropriately high standard of review to SEC rulemaking, this article identifies a more fundamental problem with these decisions: they interfere with the SEC’s power to administer the securities laws. This interference frustrates administrative law principles that lie at the heart of the division of power among the three branches of government.Requiring the SEC to engage in a quantitative analysis in rulemaking is especially troubling in a context where the SEC must pass numerous rules under the Dodd-Frank and JOBS Acts. These analyses will surely fail to capture the unquantifiable effects of SEC rules, such as their effect on firm wealth-creating strategic management processes. For these reasons, this article urges the SEC to exert its authority under securities laws and issue an explicit interpretation of the ECCF mandate in a way that best captures the full impact of its rules.