Cover: Cost, Benefit, and Risk — Keys to Evaluation of Policy Alternatives

Cost, Benefit, and Risk — Keys to Evaluation of Policy Alternatives

Published 1974

by H. G. Massey

Purchase Print Copy

 Format Price
Add to Cart Paperback15 pages $20.00

What does it cost? In describing the analyst's task in identifying "true" costs, the author explores some of the central concepts and problems of cost analysis. Within the framework of the basic purpose of analysis — to shed light on a future decision or choice among alternative ways to allocate resources — the analyst must evaluate the alternatives in terms of their costs, benefits, and risks. Several factors besides dollar expenditures must be considered: the distinction between fixed costs and variable costs; sunk costs; "external costs"; life-cycle costs; and time-phasing of costs. A new approach to the problem of external costs is described. Called System Impact Assessment, this approach attempts to evaluate the impact of system alternatives on the environment and other segments of society, along with the financial costs and user services. A scorecard provides the decisionmaker with the comprehensive view of the relative strengths and weaknesses of each alternative.

This report is part of the RAND paper series. The paper was a product of RAND from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.