An Economic Assessment of the Costs and Benefits

1972

Lucrări Ştiinţifice, Universitatea de Ştiinţe Agricole Şi Medicină Veterinară a Banatului, Timisoara, Seria I, Management Agricol, 2013

This research is focused on the general framework of cost-benefit analysis, emphasizing its concepts and key elements that ensure a proper use of the method taking into account the limited character of public resoursces. Since the decisions process on public resources'allocation aims at enhancing the social decision related to efficient allocation of public resources wich are often reduced, the instrument used in the selection process of alternative policies, programs, projects or regulations is cost-benefit analysis (CBA). Although in practice the analysis involves several complex economic and financial calculations, economists sometimes resort to methods of empirical study. In this respect, we considered necessary to identify and analyze the elements and key concepts used to achieve a proper cost-benefit analysis.

The cost-benefit anaIyst's pursuit of evidence to support the one most efficient aIlocation of economic resources deserves critical anaIysis. The analyst who uses the cost-benefit approach, we argue, recommends action based on anaIysis following vaguely defined methods. No matter how vague, these methods derive from a distinct belief about social relations and define a good citizen. Policy analysts seek intuitive, popular appeal for their work when debate widens to include many trames of reference. A single frame of reference limits participation in determining the vaIue of action for the common good, wide participation being the equivalent to a free market in good anaIyses. This chapter has two goals: to describe and then to examine critically cost-benefit analysis (CBA) as a single trame of reference for policy analysis. Policy anaIysis, in the comparing the costs, benefits, risks, and timing of govemment actionpolicy consequences-can inform decisions. The decisions may algo cause or realize (spawn) a less desirable distribution of costs and benefits among individuals. Despite its straightforward, intuiúve nature, cost-benefit analysis Tests on difficult choices about what are costs and what are benefits. Little agreement exists about how to calculate the impact of risk and timing on costs and benefits. The cost-benefit idea represents a tradeoff between efficiency and equality in social and economic affairs. Equity guides policies and programs that give to each according to bis needs from each according to her abiliúes whereas efficiency advises that public projects should result in at least one person being better off and no one worse off. Controlling what analyúcal methods to employ in making allocation choices has great allure and controversy. Cost-benefit analysis refers to the collection and organization of data relevant to a govemment leader's decision to intervene when markets fail, through public projects, programs, or regulatory regimes (Kruúlla 1961, 226; Musgrave 1969). Cost-benefit anaIysis is a form of evaluaúon research conceming: either continuing or discontinuing a program, program strategy, a technique, or an improvement, or allocating resources among competing programs Poister 1978, 8; Weiss 1972, 16-17). Evaluation criteria vary. They include effectiveness of a program's peñormance in light of specified objectives, efficiency in maximizing value or minimizing cost through technological, economic, or producúvity analysis, adequacy of the program in the degree to which the program eliminates a problem, appropriateness or worth of the program objectives, and prograrn responsiveness to the needs and desires of its users and clients. Moreover, evaluation research may take place in the research and development or even planning stage of a programo any time during the program's operaúon as a formative evaluation, or as a full scale evaluaúon in response to a sunset provision in the law creating fue program, a summaúve evaluation (Rossi

The capital expenditure appraisal process has so far been presented in the framework of a cost benefit analysis where all benefits and costs are expressed in monetary values. However, many projects or programs undertaken by governments produce benefits that may be considered to be highly desirable but whose quantification in monetary terms is difficult if not impossible. Common examples of such projects are the provision of elementary school education, improvements in the provision of health care services, investment in public security and the administration of justice. In such cases, a full cost benefit analysis may not be feasible for each individual project or program but a costeffectiveness analysis (CEA) can be carried out. Such an analysis measures the quantities of benefits generated in terms of the number of units of the items produced, but no attempt is made to convert these into monetary values. This chapter outlines a methodology for conducting cost effectiveness analysis and discusses it usefulness and its limitations. Further extensions of cost effectives are made into topics of cost utility analysis, and the limitations of cost effectiveness.

The capital expenditure appraisal process has so far been presented in the framework of a cost benefit analysis where all benefits and costs are expressed in monetary values. However, many projects or programs undertaken by governments produce benefits that may be considered to be highly desirable but whose quantification in monetary terms is difficult if not impossible. Common examples of such projects are the provision of elementary school education, improvements in the provision of health care services, investment in public security and the administration of justice. In such cases, a full cost benefit analysis may not be feasible for each individual project or program but a costeffectiveness analysis (CEA) can be carried out. Such an analysis measures the quantities of benefits generated in terms of the number of units of the items produced, but no attempt is made to convert these into monetary values. This chapter outlines a methodology for conducting cost effectiveness analysis and discusses it usefulness and its limitations. Further extensions of cost effectives are made into topics of cost utility analysis, and the limitations of cost effectiveness.

The capital expenditure appraisal process has so far been presented in the framework of a cost benefit analysis where all benefits and costs are expressed in monetary values. However, many projects or programs undertaken by governments produce benefits that may be considered to be highly desirable but whose quantification in monetary terms is difficult if not impossible. Common examples of such projects are the provision of elementary school education, improvements in the provision of health care services, investment in public security and the administration of justice. In such cases, a full cost benefit analysis may not be feasible for each individual project or program but a costeffectiveness analysis (CEA) can be carried out. Such an analysis measures the quantities of benefits generated in terms of the number of units of the items produced, but no attempt is made to convert these into monetary values. This chapter outlines a methodology for conducting cost effectiveness analysis and discusses it usefulness and its limitations. Further extensions of cost effectives are made into topics of cost utility analysis, and the limitations of cost effectiveness.

The capital expenditure appraisal process has so far been presented in the framework of a cost benefit analysis where all benefits and costs are expressed in monetary values. However, many projects or programs undertaken by governments produce benefits that may be considered to be highly desirable but whose quantification in monetary terms is difficult if not impossible. Common examples of such projects are the provision of elementary school education, improvements in the provision of health care services, investment in public security and the administration of justice. In such cases, a full cost benefit analysis may not be feasible for each individual project or program but a costeffectiveness analysis (CEA) can be carried out. Such an analysis measures the quantities of benefits generated in terms of the number of units of the items produced, but no attempt is made to convert these into monetary values. This chapter outlines a methodology for conducting cost effectiveness analysis and discusses it usefulness and its limitations. Further extensions of cost effectives are made into topics of cost utility analysis, and the limitations of cost effectiveness.

2016

Discussion Papers represent the authors ’ personal opinions and do not necessarily reflect the views of the

The capital expenditure appraisal process has so far been presented in the framework of a cost benefit analysis where all benefits and costs are expressed in monetary values. However, many projects or programs undertaken by governments produce benefits that may be considered to be highly desirable but whose quantification in monetary terms is difficult if not impossible. Common examples of such projects are the provision of elementary school education, improvements in the provision of health care services, investment in public security and the administration of justice. In such cases, a full cost benefit analysis may not be feasible for each individual project or program but a costeffectiveness analysis (CEA) can be carried out. Such an analysis measures the quantities of benefits generated in terms of the number of units of the items produced, but no attempt is made to convert these into monetary values. This chapter outlines a methodology for conducting cost effectiveness analysis and discusses it usefulness and its limitations. Further extensions of cost effectives are made into topics of cost utility analysis, and the limitations of cost effectiveness.

SSRN Electronic Journal, 2000