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Multi-criteria analysis: a tool for going beyond monetization?

Catherine D. Gamper and Catrinel Turcanu

INTRODUCTION

Multi-criteria analysis (MCA) has emerged from the field of operational research and management science as an appraisal tool able to handle complex multi-factorial decision problems that affect several stakeholders and where an equitable, inclusive and transparent decision process is sought. According to the International Multi-Criteria Decision Society (IMCDM 2013), multi-criteria analysis dates back to the 1950s when analysts started to consider multiple objectives for optimality conditions in non-linear programming - so-called 'Goal Programming'. Since then, a multitude of MCA methods have been developed (some of which will be discussed below) and their use has gone far beyond the realm of operational and business research, as we will demonstrate later in the chapter. To assess the worth of different policy options, MCA aggregates the results on multiple evaluation criteria into indicators of the overall performance of options without enforcing the transformation of criteria and their results to a common - what is in many other tools a monetary -scale. In its role as a decision aiding, rather than a decision making tool, MCA seeks to render the evaluation of policy options transparent to the decision maker and other stakeholders, instead of 'replacing the decision maker with a mathematical model' (Roy and Vincke 1981, p. 208). MCA thereby seeks to promote 'good decision making' (Keeney and Raiffa 1972, p. 65) by offering a clearer illustration of the different inputs that typically go into a policy formulation process, and by dealing in a structured way with multiple, conflicting objectives and value systems. In particular, the problem-structuring phase of the policy formulation process - during which the goals of policy, the options to be evaluated and the criteria according to which this is to be done are defined - is recognized as a useful learning opportunity to which MCA can contribute (Marttunen and Hamalainen 1995). In this phase, MCA stimulates discussion between the various stakeholders (French et al. 1993) and helps decision makers to better comprehend the decision problem, as well as the values and priorities involved (Belton and Stewart 2002).

Numerous case studies in the literature suggest that MCA has seen widespread application across different policy venues, spanning many policy areas concerning the environment, public transport and health, analysis of vulnerability to natural and man-made hazards, and many others. Indeed, MCA has been recognized by a number of governments, NGOs and international organizations as the preferred way to analyze complex decisions. It has even been legally prescribed in some cases. The tool's ability to open up to different value systems by directly representing stakeholders' preferences (through participation in the evaluation process) has particularly appealed to critics of other evaluation tools that can integrate preferences only in indirect ways, such as through monetary evaluation in CBA (see Chapter 7, this volume).

To evaluate the tool's merits, we will first take a close look at the main methodological aspects of MCA, before analyzing its application across different policy venues. This will lead us to an evaluation of the tool's added value and caveats which policymakers and analysts have to bear in mind when applying MCA in policy formulation processes. We will also provide insight into the venues that are most favourable to its application. This should hopefully inform the future application and development of MCA across different policy venues and sectors.

 
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