Why Governments Love Cost-Benefit Analysis

Cost-benefit analysis sounds like a rational way to decide on public projects. But in practice, it's a political weapon as often as an analytical tool. In this episode, Lucas and Luna look at a specific case: the California High-Speed Rail project, where early cost-benefit numbers were used to justify a $33 billion bond, then quietly revised as costs ballooned past $100 billion. They explore how assumptions about discount rates, travel time savings, and induced demand can swing a project from 'must-build' to 'never-worth-it.' They also touch on broader lessons: why governments have incentives to bake optimistic assumptions into their analysis, how the private sector would never get away with the same modelling, and what listeners should look for the next time a politician waves a cost-benefit study. No ivory-tower economics here — just the concrete decisions that shape how your tax dollars get spent. #CostBenefitAnalysis #CaliforniaHighSpeedRail #PublicFinance #GovernmentSpending #Economics #Infrastructure #DiscountRates #InducedDemand #TravelTimeSavings #BudgetAnalysis #PolicyDecisions #TaxDollars #ProjectJustification #PoliticalEconomy #FexingoBusiness #BusinessPodcast #LucasAndLuna #Fexingo Keep every episode free: buymeacoffee.com/fexingo