Project evaluation with democratic decision-making: What does cost-benefit analysis really measure?

•Standard cost-benefit analysis is based on controversial value judgments.•This is problematic when used as background information to participants in democratic project selection processes.•Cost-impact analysis, similar to CBA but with less emphasis on monetary valuation, can be better suited in such contexts.

It is often argued that projects involving public good changes should be chosen on the basis of monetary valuation and cost-benefit analysis (CBA). However, CBA is not value-free. When used to measure welfare, it is based on highly controversial value judgements. When used to measure efficiency, it is based on assumptions of limited relevance to democratic decision-making processes. CBA measures total net willingness to pay, neither more nor less. While interesting in its own right, the normative significance of this indicator is not obvious.