WHEN it comes to assessing the viability of a large project, governments are increasingly likely to commission a cost-benefit analysis (CBA). The aim is to provide an impartial, evidence-based judgment of the costs and benefits of a particular policy or project, without regard to its political ramifications. The British government is particularly keen on CBAs: having pioneered their use in the 1960s it has recently relied on them to make the case for HS2, a controversial high-speed rail link between London, Birmingham and Manchester, and to justify a cull of badgers in the countryside. In theory, putting together a CBA is simple: you simply tot up the costs in one column and the benefits in another. But the reality is rather more complex. With large amounts of money at stake and projects that can last for decades, economists have to use a number of wonkish techniques, some of which are controversial, to come up with a decent CBA. How do they do it?
