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What's the dollar value of X?

Both proponents and critics of cost-benefit analysis are on the wrong track when they talk about putting dollar amounts on non-market values. They both ignore the fact that setting dollar values is a learned skill, and one that doesn't translate easily between domains.

Proponents of cost-benefit analysis assume that it's relatively straightforward to convert non-market values into dollars. All you have to do is ask people what they'd pay for it or how much they'd sell it for. Were one to do a willingness-to-pay survey on a market good -- say bread, or cars -- the results would not be so far off the market prices. But that is because people have learned from the market what dollar value to attach to those goods. Long collective experience with bargaining between greedy sellers and stingy buyers in the idiom of money has taught people how to make that conversion.

Opponents of cost-benefit analysis, however, make the opposite mistake. It's common for critics to ask rhetorically what the price of a life or a forest is. The implication is that it's foolish to even think of such things -- the goods in question are intrinsically unable to be expressed in dollars. But in fact the problem is not the intrinsic nonmonetariness of those goods, but rather the lack of a market in them to teach us how to assign prices. Outside the modern west, placing a dollar value on land was/is considered patently impossible. Yet in the modern west, we have a thriving real estate market. Common sense about whether and how a thing can be priced is a remarkably contingent thing.

Note that this is not an argument for marketizing everything. It's dubious whether even the market's prices represent "value" in any sense relevant to the social decisionmaking that cost-benefit analysis is used for. Rather than facile assumptions that everything can be meaningfully priced, or unhelpful declarations that certain values cannot be compared, we need to focus on ways of making an explicit analysis of tradeoffs without recourse to dollar values.


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