Both Republican and Democratic administrations make regulatory and funding decisions with close reference to benefit–cost analysis (BCA). With respect to regulation, there has been a great deal of academic discussion of BCA and its limits, but almost no attention has been paid to the role of BCA in government funding. That is a serious gap, not least in connection with climate-related risks, such as wildfire, drought, extreme heat, and flooding. Office of Management and Budget (OMB) Circular A-94 sets out guidelines for the BCA required when people are applying to many federal discretionary grant programs. Through Circular A-94, OMB has long required applicants to demonstrate that the benefits of their projects would exceed the costs. But under Circular A-94 as it stood for many years, efficiency-based BCA could produce results that fail to maximize welfare and that are also highly inequitable. The 2023 revision of Circular A-94 focuses more directly on welfare and equity, which are now – not uncontroversially – being brought directly into policy. At the same time, the new Circular A-94 raises fresh questions about how best to promote welfare, and to consider equity, in practice. This article explains the economic foundations for promoting welfare through distributional weighting – and how the old BCA guidance fell short. It then offers recommendations on how to operationalize distributional weighting on the ground specifically for government spending programs – and for BCA more broadly.

In 2023, the U.S. Office of Management and Budget (OMB) issued guidance documents that specified new procedures for assessing prospective government regulations (Circular A-4) and economic policies more generally (Circular A-94). These revisions to long-standing guidance were not minor updates but shifted policy analyses from an efficiency-oriented perspective to a redistributive approach. OMB broadened the guidelines for reporting distributional consequences of policies and also specified how policy impacts on different income groups should be weighted. The weights assume that the social welfare function is governed by the sum of identical individual utility functions, each of which exhibits a substantial rate of diminishing marginal utility of income. The resulting weights provide a premium for households below the median-income level and a considerable penalty for those at higher-income levels. Application of the weights to property losses creates potentially substantial inefficiencies. If based on current empirical evidence on the income elasticity of the value of a statistical life rather than assuming that there is a complete offset of the weights, application of the weights to mortality risk valuation would generate inequities in protection.

This study develops a generalized evaluation framework that can be used to quantify the financial, economic, stakeholder, and environmental impacts of renewable energy support programs. The application of this framework is demonstrated by evaluating the feed-in tariff (FIT) program for solar distributed energy resources (DER) in Ontario, Canada. Our analysis reveals that Ontario’s FIT program has successfully promoted the adoption of solar DER across communities. However, the program has caused inequitable societal outcomes through a cross-subsidization with a present value of 9 CAD billion, paid for by the electricity consumer base for the benefit of only the 0.06 percent of electricity consumers who could install solar systems. The cost imposed on the Canadian economy ranges from 2.86 to 5.37 CAD billion, depending on the discount rate applied. The sensitivity analysis results indicate that the burden of this program on the Canadian economy would have been reduced by 50 percent if the program had been delayed and implemented in 2016 instead of 2010 due to the declining trend in solar system investment costs. The lessons from this analysis provide insights for designing future environmental and emission reduction policies.

Energy access is often considered a catalyst for development. Yet, the binary classification of household electrification misses important variation in service quality and in how households use electricity. To examine the benefits of household electrification and illustrate the importance of using more nuanced classifications of energy access, this article develops a metric called the Energy Access Dividend (EAD), which quantifies the electrification benefits forgone due to slow and incomplete energy transitions. This framework is flexible, allowing for the estimation of a variety of electrification benefits such as reduced lighting and cell phone charging expenditures, environmental improvements, time use and asset ownership changes, and improvements associated with productive energy use. To demonstrate the applicability of this framework, we calculate the EAD for several proposed electrification trajectory alternatives in Honduras. We find that in Honduras, a country with high rates of basic electricity access, achieving immediate universal, high-quality electricity would generate nearly $697 million in benefits over the period leading up to 2050. We also estimate the EADs associated with more limited immediate electrification as well as geographically based electrification scenarios, demonstrating that these calculations can inform priorities for energy policy design.

Substance use disorder (SUD) is a public health crisis in the United States associated with significant economic costs including healthcare, criminal justice, productivity, and mortality and morbidity costs. In this paper, we present a tool for a customizable economic analysis that can be utilized by different recovery program owners and operators within the SUD continuum of care that considers these program’s operating and capital costs, location, size, and success rate. The goal of this tool is to provide owners and operators with an accessible tool that can estimate their individual program’s economic costs, benefits, and return on investment. In applications of the tool, we find that there are significant benefits associated with SUD recovery-oriented services, even with more conservative modeling of recovery benefits. Specifically, we find that a representative recovery housing program in Florida yields a net benefit of $143 million over 20 years with an associated return on investment of $22.19 per dollar invested. Further, we find that the net benefits of different recovery-oriented modalities including a recovery house, a recovery campus, and a residential inpatient program are positive, with returns on investment varying from nearly $22 per dollar invested to $1 per dollar.

Patient navigation (PN) is increasingly used to help people overcome barriers to accessing health care. In a recent trial, PN was added to motivational interviewing (MI) to help patients discharged from detoxification (detox) transition to follow-up care. The goal was to test whether PN in addition to MI increased transition rates and reduced subsequent readmissions into detox compared with MI alone. Results demonstrated little evidence of a treatment effect on either of these two outcomes, but post hoc exploratory analyses showed that patients who received PN were less likely to be arrested in the year following discharge than patients who did not receive PN. In addition, the group that received PN had fewer multiple arrests resulting in a lower average number of arrests per person. These findings are hypothesis-generating and need replication for conclusive inference. Nevertheless, economic analysis indicates that PN after detox could be a cost-beneficial intervention to reduce arrests among a population at high risk for involvement in the criminal justice system.