The Government announced in the National Plan, and is now
implementing, a major increase in road expenditure. One reason why this has
happened is because cost benefit studies have suggested that such an increase
could be justified in economic terms. The argument that cost benefit studies
in some sense "justify" additional road investment has been accepted rather
uncritically in recent years, and in view of its practical consequences requires
closer examination. In discussing this argument I shall refer to Sean D. Barrett
and David Mooney's recent cost benefit analysis of the Naas bypass, as a good
recent example of such studies.
There are two basic grounds for concern at the use of cost benefit analysis
to support increases in road expenditure now. First, the type of justification for
road investment which cost benefit analysis is able to provide is a rather
specialised one. The fact that a project shows a high rate of return on a cost
benefit study does not mean that our debt problems are unlikely to be made
more acute by carrying out the project, or that the effect on permanent
employment will necessarily be favourable, or that many other forms of public
expenditure might not perform as well or better on both counts. It is doubtful
whether an expansion of road investment represents an appropriate use of the
very limited funds which can be assembled for expanding publicly funded
activities, and we are only going to find out whether it is or not if we can
develop techniques which will indicate what the likely effects of particular types
of public expenditure on employment and the public finances are going to be