Assessing Preferences in Cost-Benefit Analysis: Reflections on Rural Water Supply Evaluation in Haiti

This article examines an area of cost-benefit methodology which has come under increasing philosophical scrutiny in recent years: the appropriate treatment of individuals' preferences. We illustrate some of the difficulties involved in assessing preferences in the context of a concrete example: the evaluation of a rural water supply project in southern Haiti. Four problems in the application of cost-benefit principles are discussed: (1) how to count the social value of private water taps connected to homes if they are preferred for prestige reasons, (2) how to assess husbands' preferences concerning the time savings by wives who previously carried water from more distant sources, (3) how to count preferences based on a respondent's desire to support general community welfare, and (4) how to evaluate a water project when people's preferences may change after the new water system is installed. We argue that policy analysis will be improved by presenting philosophical arguments as to why some preferences should be included in the evaluation and others ignored.