and costs. All relevant costs and benefits must be counted, including those
that are economic, financial, physical, emotional, spiritual and social.
All of this means that net benefit possesses a great strength and great
weakness. Net benefit is a single measure of the worth of a policy proposal. In
principle it provides a perfectly logical way to proceed when confronted by
two or more options: choose the option which possesses the highest
net
benefit. This is the strength of net benefit.
In practice, however, there is a problem with how to measure net benefit.
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Put briefly, there are the related problems of measurement and comparison.
Some things cannot be measured. Even where they can be measured, they are
not always measured by the same means. In ordinary language this is
portrayed as the problem of apples and oranges or chalk and cheese.
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This is
the weakness of net benefit. This chapter explores ways that seek to overcome
this problem.
Methods of Measurement
[T]he anticipated impacts of the proposed action and of each alternative
should be stated and presented in a way that permits a comparison of the
costs and benefits.
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Introduction
Things can be measured on four types of measurement scales. These are the
nominal scale, the ordinal scale, the interval scale and the ratio scale. The
scales divide among themselves four desirable properties –
classification (by
putting a distinguishing label or value on an item), magnitude, equal intervals
___________________
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Volume 146 of the University of Pennsylvania Law Review (1998) is
devoted to the problems of measurement and incommensurability –
see Adler
(1998A), Adler (1998B), Chapman (1998), Craswell (1998), Hadfield (1998),
Johnston (1998), Katz (1998), Posner (1998), Schauer (1998), Warner (1998).
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Many languages have expressions that say the same thing but often by
reference to different items. (i) Many European languages refer to apples and
pears. (ii) Serbians refer to comparing grandmothers and toads. (iii) Romanians
refer to comparing the grandmother and the machine gun, or the cow and the
longjohns.
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Subordinate Legislation Act 1989 (NSW) Schedule 2, Clause 2. A little
explanation is required. Section 5(1) of the Subordinate Legislation Act 1989 (NSW)
requires the making of a legislative impact statement before a major statutory rule
is made. Clause 1 of Schedule 2 provides, in a little detail, that this statement will
include what amounts to a cost benefit analysis. Clause 2(2) then requires that
costs and benefit should be measured. If this is not possible, it goes on to provide,
as quoted in the text, that “the anticipated impacts of the proposed action and of
each alternative should be stated and presented in a way that permits a
comparison of the costs and benefits”.
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