Summer Reading

by | Jun 4, 2014 | Uncategorized

As recommended by the US DOT I received a new book today: Cost-Benefit Analysis1.

“Cost–benefit analysis (CBA) is the systematic and analytical process of comparing benefits and costs in evaluating the desirability of a project or programme – often of a social nature. CBA is fundamental to government decision making and is established as a formal technique for making informed decisions on the use of society’s scarce resources. It attempts to answer such questions aswhether a proposed project is worthwhile, the optimal scale of a proposed project and the relevant constraints. CBA can be applicable to transportation projects,environmental and agricultural projects, land-use planning, social welfare and educational programmes, urban renewal, health economics and others.”

The 5th edition examines new work in the CBA discipline:

  • non-market goods valuation
  • the impact of uncertainty
  • transportation economics
  • investment appraisal
  • environmental economics
  • evaluation of programmes and services
  • the impact of game theory on CBA

I was pleased to see that the preface said : “Cost–Benefit Analysis addresses itself primarily to the ‘mature student’” although I think I am mature in a way they did not intend.

Nonetheless I am excited (as only an economist can be) to read about these new topics. I am hoping that this book will add to our current thinking in AutoCASE that is built upon Multiple Account Benefit Cost Analysis by Marvin Shaffer as well as the seminal Cost-Benefit Analysis by Layard and Glaister. The game theory angle I find interesting and I think that with Distance Decay Willing to Pay Functions and Risk Analysis informed by meta-analysis we can make CBA relevant and useful in infrastructure evaluation.

1E.J. Mishan and Euston Quah, Cost-Benefit Analysis, 5th edition (New York: Routledge, 2007).

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