Towards improved handling of uncertainty in cost-benefit analysis: addressing the ‘price-quality’ and ‘communication’ dilemmas
An important limitation of Cost-Benefit Analysis (CBA) is the inherent uncertainty in estimations of future welfare effects. In this paper, we argue that consideration of the ‘pricequality’ dilemma and the ‘communication’ dilemma is useful to explain and improve the handling of uncertainty in CBA. T...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
TU Delft OPEN Publishing
2015-06-01
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| Series: | European Journal of Transport and Infrastructure Research |
| Online Access: | https://journals.open.tudelft.nl/ejtir/article/view/3082 |
| _version_ | 1797427305314779136 |
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| author | Niek Mouter Marc Holleman Simeon Calvert Jan Anne Annema |
| author_facet | Niek Mouter Marc Holleman Simeon Calvert Jan Anne Annema |
| author_sort | Niek Mouter |
| collection | DOAJ |
| description | An important limitation of Cost-Benefit Analysis (CBA) is the inherent uncertainty in estimations of future welfare effects. In this paper, we argue that consideration of the ‘pricequality’ dilemma and the ‘communication’ dilemma is useful to explain and improve the handling of uncertainty in CBA. The ‘price-quality’ dilemma refers to the trade-off between the quality of welfare effect estimations and the costs of providing these estimations. Instruments to produce good quality effect estimates (including uncertainties) can be expensive both in monetary terms and time. We discuss the application of probabilistic traffic models as a promising example of how the ‘price-quality’ dilemma can be solved. The ‘communication’ dilemma refers to the observation that both a poor communication and a too prominent communication of uncertainties can cause problems for decision-makers. We argue that cognitive psychological theory provides useful perspectives to solve this dilemma, by providing a psychological framework which might help to explain why different types of people process CBA information differently. The results of this research may enhance first insights into the questions how the two dilemmas can be solved. |
| first_indexed | 2024-03-09T08:43:22Z |
| format | Article |
| id | doaj.art-de25f8d01bc04837ae84cba0ac05bbf2 |
| institution | Directory Open Access Journal |
| issn | 1567-7141 |
| language | English |
| last_indexed | 2024-03-09T08:43:22Z |
| publishDate | 2015-06-01 |
| publisher | TU Delft OPEN Publishing |
| record_format | Article |
| series | European Journal of Transport and Infrastructure Research |
| spelling | doaj.art-de25f8d01bc04837ae84cba0ac05bbf22023-12-02T16:30:48ZengTU Delft OPEN PublishingEuropean Journal of Transport and Infrastructure Research1567-71412015-06-0115310.18757/ejtir.2015.15.3.30822695Towards improved handling of uncertainty in cost-benefit analysis: addressing the ‘price-quality’ and ‘communication’ dilemmasNiek Mouter0Marc Holleman1Simeon Calvert2Jan Anne Annema3Delft University of TechnologyDelft University of TechnologyDelft University of TechnologyDelft University of TechnologyAn important limitation of Cost-Benefit Analysis (CBA) is the inherent uncertainty in estimations of future welfare effects. In this paper, we argue that consideration of the ‘pricequality’ dilemma and the ‘communication’ dilemma is useful to explain and improve the handling of uncertainty in CBA. The ‘price-quality’ dilemma refers to the trade-off between the quality of welfare effect estimations and the costs of providing these estimations. Instruments to produce good quality effect estimates (including uncertainties) can be expensive both in monetary terms and time. We discuss the application of probabilistic traffic models as a promising example of how the ‘price-quality’ dilemma can be solved. The ‘communication’ dilemma refers to the observation that both a poor communication and a too prominent communication of uncertainties can cause problems for decision-makers. We argue that cognitive psychological theory provides useful perspectives to solve this dilemma, by providing a psychological framework which might help to explain why different types of people process CBA information differently. The results of this research may enhance first insights into the questions how the two dilemmas can be solved.https://journals.open.tudelft.nl/ejtir/article/view/3082 |
| spellingShingle | Niek Mouter Marc Holleman Simeon Calvert Jan Anne Annema Towards improved handling of uncertainty in cost-benefit analysis: addressing the ‘price-quality’ and ‘communication’ dilemmas European Journal of Transport and Infrastructure Research |
| title | Towards improved handling of uncertainty in cost-benefit analysis: addressing the ‘price-quality’ and ‘communication’ dilemmas |
| title_full | Towards improved handling of uncertainty in cost-benefit analysis: addressing the ‘price-quality’ and ‘communication’ dilemmas |
| title_fullStr | Towards improved handling of uncertainty in cost-benefit analysis: addressing the ‘price-quality’ and ‘communication’ dilemmas |
| title_full_unstemmed | Towards improved handling of uncertainty in cost-benefit analysis: addressing the ‘price-quality’ and ‘communication’ dilemmas |
| title_short | Towards improved handling of uncertainty in cost-benefit analysis: addressing the ‘price-quality’ and ‘communication’ dilemmas |
| title_sort | towards improved handling of uncertainty in cost benefit analysis addressing the price quality and communication dilemmas |
| url | https://journals.open.tudelft.nl/ejtir/article/view/3082 |
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