This paper analyzes cost-benefit analysis from legal, economic, and philosophical perspectives. The traditional defense of cost-benefit analysis is that it maximizes a social welfare function that aggregates unweighted and unrestricted preferences. Professors Adler and Posner follow many economists and philosophers who conclude that this defense is not persuasive. The view that the government should maximize the satisfaction of unrestricted preferences is not plausible. However, the authors disagree with critics who argue that cost-benefit analysis produces morally irrelevant evaluations of projects and should be abandoned. On the contrary, cost-benefit analysis, suitably constrained is consistent with a broad array of appealing normative commitments, and it is superior to alternative methods of project evaluation. It is a reasonable means to the end of maximizing overall welfare when preferences are undistorted or can be reconstructed. And it both exploits the benefits of agency specialization and constrains agencies that might otherwise evaluate projects improperly.
