RECENTLY, a resolution was submitted in Punjab’s provincial assembly demanding a complete ban on Indian dramas and movies, on the premise that they represent a ‘cultural attack’. Is such a premise sound?

It’s hard to accept that people actually forego their culture and become less patriotic by watching foreign movies. And if Indian movies can alter our culture, shouldn’t we also be concerned about Western movies? Moreover, if we assume such ‘attacks’ can happen through movies, then what of literature or music? Nor is such a ban practical in the age of the internet.

This resolution, however, interests me more — at the risk of my patriotism being questioned, but I proceed, believing the benefits justify the cost — from a cost-benefit analysis (CBA) standpoint. I think resolutions such as these (and many other costly regulations and statutes in the past), devoid of any CBA, are overreactions to emotional appeals. Anything that impacts the public at large must be subjected to an objective CBA, which should be available for scrutiny by the public and other institutions.

Transparency can help bring consensus.

Without CBA, we may end up ignoring pertinent data and hidden costs — as we are doing in the case of this resolution. Consider.

The resolution disregards real data. For one, what if Indian movies account for a reasonable chunk of cinema revenues? If that’s true, revenues for cinema owners would drop significantly. With no future revenue, cinema owners would likely halt all future projects, which would possibly result in significant losses for both cinema owners and the government.

If revenues are significantly depleted, cinema owners may be forced to lay workers off. It’s important to pause and consider how many workers this would mean, and the difficulties they’ll likely face — unemployment, households dependent on their lost incomes, being forced to cut spending on health and education for their families. In such a scenario, the welfare of a sizeable enough number of citizens is compromised, while the affluent will most likely continue to watch such movies on their internet-enabled TVs.

Shrinking revenues also mean that the payback period for projects will lengthen and owners will get their money back late, adding to the cost of doing business. Moreover, owners will be forced to raise prices at the concession stand to cover their operating expenditures — the cost of the regulation thus being passed on to consumers. All of this sends a signal to potential (local and foreign) entrepreneurs that this sector is prone to massive fluctuations and, therefore, future investments in it may be hampered. There is also the element of leisure to consider; people enjoy watching movies. Was this taken into account?

One may argue that such cost projections are speculative. Had a thorough and objective CBA accompanied the resolution, it would have invalidated all such projections. The idea of truly promoting the people’s welfare without weighing all the benefits and costs is hard to digest. Without CBA, we make costly mistakes, and in its absence all we can do is rely on guesswork. Even a rudimentary CBA can point out hidden costs and benefits that would otherwise go unnoticed. Regulations must, therefore, be subjected to CBA.

People may point out issues with this method, but various scholars suggest that CBA is the way to go. It provides numerous benefits that not only allow for economic analysis of regulations but also strengthen democracy.

First, CBA can introduce discipline, which can help a government do better in setting priorities (for the welfare of people) and (already scarce) resource allocation. It’s important that every regulation or project ultimately benefits society at large – and CBA can help with that. More­over, thinking in terms of cost, benefits and welfare forces us to acquire better information. This in turn results in better governance, as opposed to, as legal scholar Cass Sunstein notes, “interest-group power, selective attention, legislation by anecdote and media sensationalism”. And, provided that CBA is open for review by all stakeholders and the public, it can also help rationalise cost and benefit estimates.

Finally, but most importantly, all of the benefits noted above can improve transparency (particularly important in policy avenues of monumental scale such as CPEC) and help curb inherent biases. Transparency can help bring consensus.

Some people may argue that because of misaligned political incentives, inherent biases and sprawling bureaucracy, CBA may slow down the decision-making process (thereby adding more costs), but strong regulation around it can prevent this. CBA can even prove to be a very helpful tool for a government to defend itself against various allegations. Without a political culture rooted in cost-benefit analyses we may end up in a less democratic culture — in which individuals may be seen acting in their own self-interest rather than for the common good.

The writer works in the technology sector.

Published in Dawn, January 20th, 2017