Course Description
This course is designed to introduce students to the basic principles of Cost-Benefit Analysis. It provides the opportunity to enhance both analytical and quantitative skills required for effective Cost-Benefit Analysis of various public and private projects and to evaluate and influence the design of policy design and government regulations. Topics include project evaluation techniques, common C-B measures, correct accounting measures of time, costs, and benefits, the measurement of social value and welfare change, shadow prices, present and future values, accounting for intangibles, the determination of the appropriate discount rate, inflation, contingent valuation, public enterprise pricing rules, and the incorporation of risk and uncertainty.
Course Content
- Introduction
- CBA, purpose and applications
- Foundations of CBA
- Measuring efficiency, willingness-to-pay, compensation, and political process
- Measurement of changes in welfare, consumer surplus and efficiency
- Cost and benefit evaluation in primary markets
- Cost and benefit evaluation in secondary market
- Timing, discounting, and future values
- Expected values and uncertainty
- Social discount rate
- Shadow prices
- Applications and examples
Means of Assessment
Means of Assessment:
Term test(s) 25% - 50%
Assignments/ projects 10% - 35%
Final Exam 30% - 40%
Total 100%
(no individual test or assignment to exceed 40%)
Students may conduct research as part of their coursework in this class. Instructors for the course are responsible for ensuring that student research projects comply with College policies on ethical conduct for research involving humans, which can require obtaining Informed Consent from participants and getting the approval of the Douglas College Research Ethics Board prior to conducting the research.
Learning Outcomes
At the end of the course, the successful student should be able to:
- Compare methodologies and assess information requirements for cost-benefit analysis (CBA)
- Critique and compare the common cost-benefit analysis measures
- Evaluate and demonstrate an understanding of the concepts of social welfare, market failure and efficient resource allocation
- Correctly account for and measure time, costs, and benefits
- Explain the distributional consequences of changes in social surplus which result from policies, projects, and programs
- Apply and evaluate discounting methods for inter-temporal comparisons of costs and benefits
- Analyze the impact of uncertainty on cost-benefit analysis
- Explain how to use cost-benefit analysis as a tool to provide economic advice and evaluate government policy
Textbook Materials
The textbook is:
A.E. Boardman, D.H. Greenberg, A.R. Vining, and D.L. Weimer, Cost-Benefit Analysis: Concepts and Practice, Pearson Education.
or textbook as approved by the Economics Department.