A Critical Review of the Traditional Methodology of Cost-Benefit Analysis and a Proposed Alternative

“Risk management” is essential to the decision-making process that prescribes regulations for protecting human health. As a comprehensive decision-making approach, risk management encompasses risk assessment, risk perception, economic factors, and their respective uncertainties. Cost-benefit analysis (CBA) has long been the preferred methodology for evaluating the economic factors associated with such regulations. Within this context, CBA confirms whether or not the “benefit” of a given regulatory option is greater than its “cost.” This article proposes an alternative CBA methodology whose guiding concept is the “optimization” of outcomes for the stakeholders in regulations that aim to protect human health. This article further proposes evaluation criteria for CBA and critiques the traditional and alternative variants against this standard, ultimately to demonstrate the superiority of the latter.