why is cost-benefit analysis considered a utilitarian model of evaluation
Cost–benefit analysis Cost–benefit analysis is often used by organizations to appraise the desirability of a given policy. It is an analysis of the expected balance of benefits and costs, including an account of foregone alternatives and the status quo. CBA helps predict whether the benefits of a policy outweigh its costs, and by how much relative to other alternatives, so that one can rank alternate policies in terms of the cost–benefit ratio.[3] Generally, accurate cost–benefit analysis identifies choices that increase welfare from a utilitarian perspective. Assuming an accurate CBA, changing the status quo by implementing the alternative with the lowest cost–benefit ratio can improve Pareto efficiency.[4] While CBA can offer a well-educated estimate of the best alternative – perfect appraisal of all present and future costs and benefits is difficult –, perfection in terms of economic efficiency and social welfare are not guaranteed.[5]
United States Postal Service Furthermore, some economists have argued that because public enterprises may pursue objectives different than profit maximization, they might have more of an incentive than profit-maximizing firms to behave anticompetitively through policies such as predatory pricing, misstating costs, and creating barriers to entry.[111] To resolve those issues, one economist proposes a cost-allocation model that would determine the optimal allocation of USPS's common costs by finding the share of costs that would maximize USPS profits from its competitive products.[112] Postal regulators could use such a cost model to ensure that the Postal Service is not abusing its statutory monopoly by subsidizing price cuts in competitive product markets with revenue obtained from the monopolized market.[113]