13 - Cost-Benefit Considerations about Human Rights as Goals, Means and Constraints

Summary

While there is a vast literature in economics on cost-benefit analysis (CBA), caution is appropriate when applying it and making the business case for human rights. Sen distinguishes two broad kinds of CBA: (1) The general approach to CBA includes explicit valuation, broadly consequential evaluation and additive accounting and is supported by a wide consensus. (2) Additional requirements of CBA are structural demands, evaluative indifferences and market-centered valuation. While they can provide gains mainly in convenience and usability, they significantly reduce the reach of the evaluative exercise. This occurs particularly in the mainstream approach of CBA, which uses the market analogy to assess the costs and benefits of public policies and corporate strategies. The chapter argues that a general CBA approach to human rights is acceptable, but only with limited additional requirements. Dorothée Baumann-Pauly & Michael Posner distinguish the negative and the positive business cases for human rights. The first type is reactive and mostly applies a purely economic rationale. The second type is proactive and innovative, incorporates human rights into the core business strategy and adopts a long-term perspective.