What is a cost-benefit fallacy?

The term “cost-benefit fallacy” is not a formally recognized logical fallacy, but it might be used to refer to errors in cost-benefit analysis.

Cost-benefit analysis is a framework for systematically evaluating the advantages and disadvantages of investments, policies, and other decisions in fields such as economics, public policy, and healthcare.

Mistakes in cost-benefit analyses can include the following:

  • Confirmation bias: favoring information that supports preconceived notions
  • Incomplete data: overlooking relevant costs or benefits
  • Subjectivity: biases in valuing intangible benefits or costs
  • Discounting: incorrect application of discount rates affecting future values

Time horizon: misjudging the appropriate timeframe for analysis