Critique of Cost-Benefit Studies
Numerous criticisms have been levelled against the approach of cost benefit studies. Many of these criticisms are centred on the assumptions underlying the cost benefit studies. For instance, assumption about the average span of working life in life time returns will vary from researcher to researcher. Some of the researchers do not take waiting time for employment into account or underestimate the same. Further, job in life need not be tied to the qualification of a person. Sometimes women are not considered for certain jobs even though they have the requisite qualifications.
Promotions within a career need not be based on additional qualifications or merit. There has been a long standing debate on the role of intelligence in success in life. Intelligence, defined as native ability, an inborn potential that is inherited from one’s parentage is considered as crucial for achievement and success in life. The environmentalists reason out that intelligence is a social construct. It has no meaning when it is divorced from social life. It is fashioned by the vicarious and rich quality of the social milieu in which one lives. The level of development of a society is dependent upon the levels to which a person’s abilities can blossom. Education, whether it is formal or informal or non formal, is one of these social determinants. Believers in inherited abilities discount the value of education in life time earnings. They consider that to a large extent the success of a person in a career or self employment or business or trade depends on his intelligence which is an inborn potential. Intelligence or innate abilities of a person, his personality structure, styles of work etc. may influence his chances of getting better jobs, promotions and higher earnings.
Keeping in view all these objections to the computation of returns wherein qualifications are given status as causal variables for life time earnings of a person, researchers in the area of cost benefit studies generally allow a correction factor, by way of a coefficient (or a constant), to take care of contributions to life time earnings from all the extraneous variables. The per centage of allowance credited to these variables ranges from 20 to 30 in studies on estimates of returns.