Why don't cost-benefit results count for more? The case of Norwegian road investment priorities

Abstract

The starting point is that the benefit/cost ratio is virtually uncorrelated to the likelihood of a Norwegian classified road project entering the list of investments selected for the National Transport Plan. The purpose of the article is to explain what pushes cost-benefit results into the background in the prioritization process. The reasons for their downgrading point to mechanisms that are at work not only in Norway. Explanatory factors are searched for in incentives for cost-ineffective action among planners, bureaucrats and national politicians, respectively, as well as in features of the planning process and the political system. New data are used to show that the road experts’ list of prioritized projects changes little after submission to the national politicians, suggesting that the Norwegian Public Roads Administration puts little emphasis on its own cost-benefit calculations. Besides, it is shown that the petroleum revenues of the state do not provide a strong reason for neglecting costbenefit accounts. The overall contribution of the article is to offer a comprehensive explanation why professional and political authorities in Norway set road-building priorities diverging massively from those suggested by cost-benefit analysis.