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The Influence of Individual Characteristics and Institutional Norms on Bureaucrats’ Use of Cost–Benefit Analysis: A Choice Experiment

Published online by Cambridge University Press:  14 December 2020

Johanna J. Hammes Open the ORCID record for Johanna J. Hammes [Opens in a new window] ,
Lena Nerhagen  and
Heather C. Fors
Johanna J. Hammes*
Affiliation:
Swedish National Road and Transport Research Institute, VTI, Box 55685, Stockholm102 15, Sweden
Lena Nerhagen
Affiliation:
Dalarna University, Borlänge, Sweden
Heather C. Fors
Affiliation:
Department of Economics, University of Gothenburg, Gothenburg, Sweden
*
*e-mail: [email protected]
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Abstract

A commonly assumed reason for the delegation of authority from a legislature (politicians) to bureaucracies is that the bureaucrats have an information advantage over the politicians, including knowledge of cost–benefit analysis (CBA). But it is reasonable to assume that the bureaucrats use their information advantage by taking all relevant aspects of policy into account? We model the use of CBA using a delegation model and then test the theoretical predictions with empirical data collected from five Swedish government agencies. The empirical results lend support both for the hypothesis that risk aversion concerning the environmental outcome, the bureaucrats’ environmental attitudes, and the cost of taking CBA information into account have a considerable impact on the probability of using information from a CBA. Hence risk averse and bureaucrats with strong environmental preferences are less likely and bureaucrats with low cost of doing a CBA more likely than other bureaucrats to use CBA information. Finally, a binding governmental budget constraint may positively influence a bureaucrat’s choice of using CBA information. A tentative conclusion is therefore that it may be possible to increase the use of CBA by making the budgetary consequences of policies much clearer and demanding due consideration of costs.

Keywords

bureaucratscost–benefit analysisdelegationenvironmental policyenvironmental preferencesrisk aversion/neutral/lovingD61D73H41
Type
Article
Information
Journal of Benefit-Cost Analysis , Volume 12 , Issue 2 , Summer 2021 , pp. 258 - 286
Copyright
© The Author(s), 2020. Published by Cambridge University Press on behalf of the Society for Benefit-Cost Analysis

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