A cost-benefit analysis is a decision-making tool. It is a process of adding up the benefits of doing something or buying something and subtracting the costs to help us decide whether that purchase or action is worthwhile. Some benefits, and some costs, can be intangible, but it is an effective exercise used by businesses, governments, and even individuals. We have all performed this analysis even if we did not know there was a technical term for it.
Have you ever wanted that new gadget but passed on buying it because it just wasn’t in your budget? Or didn’t buy that new car because it was more economical to keep your current car for one more year? Those are both decisions made when costs outweighed the benefits.