| Mr. Mutti | Ecn 250 |
| Carnegie 204 | Fall 1998 |
|
|
Paper on Benefit-Cost Analysis
The goal of this assignment is that you analyze and critique a government assessment of the economic impacts of a public works project (an area where this technique has been applied most extensively.) A guideline for organizing your paper is as follows:
| I. | Introduction - Concisely summarize the nature and location of the project analyzed and the economic justification for proceeding with the project. | |
| II. | Identify relevant economic benefits from the project. Possible items to consider are: | |
| A. | What are the effects on national output, and how do they differ from regional output effects? Are there important pecuniary effects? | |
| B. | How are real benefits measured - What savings of real resources occur for current users, what growth in demand is projected to occur in the absence of the project, and what growth in demand is projected to occur because of the project? Are concepts such as demand elasticity relevant in determining benefits? What prices are used to evaluate additional output, and how are changes in land prices treated? Does job creation constitute a benefit, or does that count only in depressed areas? | |
| C. | In calculating a single discounted present value measure of benefits, what discount rate is used, what project life is assumed, and how sensitive are any conclusions to these choices? | |
| III. | Identify the relevant economic costs of the project. | |
| A. | Are distinctions between initial construction costs and operation and maintenance costs relevant? What prices are used to evaluate input costs? | |
| B. | How do concerns over environmental quality alter the analysis? | |
| IV. | Summarize the project benefits and costs identified above. | |
| V. | Evaluate the implications for income distribution of the project. Who is to pay for the project (federal taxpayers, state taxpayers, beneficiaries of the project)? | |
| VI. | Conclusions - Your assessment of how useful and thorough the study is and your recommendation of appropriate action to be taken. (You may take into account comments of other agencies that are entered as part of the public record.) | |
| VII. | Bibliography - (Make sure I can tell where your case was reported.) | |
The total length of your paper should be 6-10 pages. The majority of it should be focused on points II and III. The due date for the paper is October 30, 1998.
|
 Grinnell College Home Page |
Professor Mutti's Page |
|