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).