Well-Being Analysis vs. Cost-Benefit Analysis

Cost-benefit analysis (CBA) is the primary tool used by policymakers to inform administrative decisionmaking. Yet its methodology of converting preferences (often hypothetical ones) into dollar figures, then using those dollar figures as proxies for quality of life, creates significant systemic errors. These problems have been lamented by many scholars, and recent calls have gone out from world leaders and prominent economists to find an alternative analytical device that would measure quality of life more directly. This Article proposes well-being analysis (WBA) as that alternative. Relying on data from studies in the field of hedonic psychology that track people’s actual experience of life—data that have consistently been found reliable and valid—WBA is able to provide the same policy guidance as CBA without CBA’s distortionary reliance upon predictions and dollar figures. We show how WBA can be implemented, and we catalog its advantages over CBA. In light of this comparison, we conclude that WBA should assume CBA’s role as the decisionmaking tool of choice for administrative regulation. Copyright © 2013 by John Bronsteen, Christopher Buccafusco, and Jonathan S. Masur. † Associate Professor, Loyola University Chicago School of Law. †† Assistant Professor, Chicago-Kent College of Law. ††† Deputy Dean, Professor of Law and Herbert and Marjorie Fried Teaching Scholar, University of Chicago Law School. We thank Matthew Adler, Frederic Bloom, David Driesen, Aziz Huq, Lee Fennell, Alison LaCroix, Richard McAdams, Jennifer Nou, Eric Posner, Lisa Robinson, Dave Schwartz, Lior Strahilevitz, and David Weisbach for helpful comments. We also thank the participants in the 2013 Duke Law Journal Administrative Law Symposium, as well as the excellent editors of the Duke Law Journal. Carl Newman provided excellent research assistance. Jonathan Masur thanks the David and Celia Hilliard Fund for research support. BBM IN PRINTER PROOF (DO NOT DELETE) 4/15/2013 2:54 PM 1604 DUKE LAW JOURNAL [Vol. 62:1603