Cost-Benefit Analysis in public decision-making: insights from the 27 EU member states

This paper explores how Cost-Benefit Analysis (CBA) is employed in the appraisal of investment projects by the governments of the 27 European Union (EU) Member States. Although the significance of CBA in informing public policy is broadly recognized, there remains a substantial gap in the literature regarding its concrete use in decision-making. Drawing on the views of 100 experts from the public sector, academia, and business and supported by a literature review, the study reveals that while most countries have legal requirements for CBA, its application varies widely in terms of implementation. CBA is commonly used to justify project selection and prioritize investments, but is rarely applied for ex-post evaluation or policy learning. Few countries have centralized structures to ensure consistent quality, and many rely on external consultants. Sectoral gaps persist, particularly in health, education, ICT, environment and R&D. A correlation analysis with the World Bank Governance Indicators shows that in countries with stronger institutional frameworks, CBA tends to be more structured, applied earlier in the project cycle and supported by more straightforward guidelines. These findings point to the need for greater standardization of CBA guidelines and legislation on public investment appraisal, clearer institutional roles, and expanded application of CBA across emerging public investment domains.