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Economics, Risk-Cost-Benefit Analysis, and the Linearity Assumption

Published online by Cambridge University Press:  28 February 2022

K. S. Shrader-Frechette
K. S. Shrader-Frechette*
Affiliation:
University of California, Santa Barbara
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Extract

Risk assessment, or risk-cost-benefit analysis (RCBA), an offshoot of decision analysis, has been widely touted as a “developing science” (see, for example, Levine 1979, p. 634). Used to help administrators make decisions on how to spend money, this set of procedures is directed at calculating whether the expected benefits from a proposed activity outweigh its expected risks or costs. For example, experts might wish to determine, given the risk of nuclear core melt and the possible resultant release of radioactive materials, whether additional containment (for reactor vessels) would be cost-effective.

In the sixties, RCBA was integrated into the planning and budgeting efforts of many federal agencies in the defense, aerospace, and energy fields. In the seventies, a number of regulatory agencies controlling environmental and occupational hazards likewise began to use the technique.

Type
Part V. Measurement, Verisimilitude and Decision
Information
PSA: Proceedings of the Biennial Meeting of the Philosophy of Science Association , Volume 1982 , Issue 1: Volume One: Contributed Papers 1982 , 1982 , pp. 217 - 232
Copyright
Copyright © Philosophy of Science Association 1982

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Footnotes

1

An earlier version of this paper was presented on December 1, 1981, at the Boston Colloquium for the Philosophy of Science. I am grateful to Professors Joseph Agassi, Robert Cohen, Sheldon Krimsky, and Marx Wartofsky for comments which enabled me to strengthen this essay.

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