The “Relationship Premium”: Should Cost- Benefit Analysis Include the Value of Human Connections?

Abstract

People care enormously about what happens to those with whom they are close. Nonetheless, standard cost- benefit analyses usually measure only direct impacts on individuals, as well as sometimes the abstract preferences people have about matters with which they have no connection. This ignores the indirect impacts of regulations on the loved ones of those directly impacted. This Article argues that these residual effects are more than mere opinions, but instead may result in distinct costs and benefits for the people who are indirectly impacted; more concretely, policies that could prevent the anguish of a parent, or create the pride of a sibling or spouse, ought to consider those effects if possible. This Article will examine if there is evidence that such “relationship premiums” exist, and address some of the implications and complications associated with including such costs and benefits in regulatory decisionmaking.