Scandinavian Working Papers in Economics

Working Papers,
Swedish National Road & Transport Research Institute (VTI)

No 2019:6: The influence of individual characteristics and institutional norms on bureaucrats’ use of CBA in environmental policy: a model and a choice experiment

Johanna Jussila Hammes (), Lena Nerhagen () and Heather Congdon Fors ()
Additional contact information
Johanna Jussila Hammes: Swedish National Road & Transport Research Institute (VTI), Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Lena Nerhagen: Dalarna University, Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Heather Congdon Fors: University of Gothenburg, Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden

Abstract: Social scientists regularly criticize the use of cost-benefit analysis (CBA), which has led to much focus being placed on investigating the possible biases related to its results. Recent research shows that CBA is not routinely done prior to environmental, energy, and climate policymaking in Sweden, and in countries where a CBA is made, the results have little influence on political decisions. This paper investigates obstacles to using CBA information with a focus on bureaucrats. We use empirical data from Sweden, where the ministries are small by international standards and hence government agencies have a sizeable influence on policymaking. We construct a theoretical model and then test the theoretical predictions with empirical data collected from five Swedish government agencies. The empirical results lend support both for the assertion that risk aversion concerning the environmental outcome, the bureaucrats’ environmental attitudes, and the cost of taking CBA information into account have a considerable impact on the probability of using information from a CBA. Hence risk averse and bureaucrats with strong environmental preferences are less likely and bureaucrats with low cost of doing a CBA more likely than other bureaucrats to use CBA information. Finally, a binding governmental budget constraint may positively influence a bureaucrat’s choice of undertaking a CBA. A tentative conclusion is therefore that it may be possible to increase the use of CBA by making the budgetary consequences of policies much clearer and demanding due consideration of costs.

Keywords: Bureaucrats; Cost-Benefit Analysis; Delegation; Environmental Policy; Environmental Preferences; Risk Aversion/Neutral/Loving

JEL-codes: D61; D73; H41

44 pages, September 27, 2019

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