Equity Considerations in Benefit-Cost Analysis: A Necessity or an Overreach

This paper addresses the pressing need for incorporating equity considerations into Benefit-Cost Analysis (BCA) within U.S. transportation and infrastructure projects, with a primary focus on equity-based BCA. Utilizing a comprehensive meta-analysis, the paper delves into the influencing factors that underpin the pursuit of equitable outcomes, examining key aspects such as assumptions and considerations, the scope of benefits and costs, the treatment of long-term and indirect effects, and the integration of environmental and social concerns. Furthermore, the paper highlights the significance of these factors in discussions surrounding the reformation of BCA practices. The studies examined also examine the current notion of efficiency in BCA, emphasizing the potential for redistribution through taxes and transfers as well as the hypothetical ability for those benefiting from policies to compensate those who are worse off via a costless, lump-sum transfer to ensure overall societal betterment. The paper concludes with insights into policy and practice implications, offering recommendations for enhancing BCA practices in the context of transportation and infrastructure projects and suggesting avenues for fostering more informed decision-making.