Cost Benefit Analysis

Book Cover......Page 1
Title......Page 4
Copyright......Page 5
Contents......Page 6
Preface to the fifth edition......Page 10
Part I: Scope and method......Page 14
1 Introductory remarks......Page 16
2 Cost-effective analysis......Page 21
3 Proposals for weighting money valuations......Page 24
Part II: Basic concepts of benefits and costs......Page 34
4 Measurements of consumer surplus......Page 36
5 Consumer surplus when several prices change......Page 45
6 Consumer surplus when other things change......Page 52
7 Introduction to the compensating variation......Page 58
8 Measurements of rent......Page 62
9 Is producer surplus a rent?......Page 68
Part III: Shadow prices and transfer payments......Page 72
10 Introductory remarks......Page 74
11 Opportunity cost of labour......Page 77
12 Opportunity cost of unemployed labour......Page 82
13 The additional benefits of using unemployed labour......Page 85
14 The opportunity costs of imports......Page 89
15 Transfer payments and double counting......Page 94
Part IV: External effects......Page 98
16 Introduction to external effects......Page 100
17 Adverse spillovers: The complacent view......Page 107
18 Internalizing externalities......Page 112
19 Evaluating spillovers......Page 117
20 Compensating for environmental damage......Page 124
Part V: Investment criteria......Page 132
21 Introduction to investment criteria......Page 134
22 Crude investment criteria......Page 138
23 The discounted present value criterion......Page 142
24 The internal rate of return......Page 148
25 The alleged superiority of the discounted present value criterion compared with the internal rate of return criterion......Page 152
26 Investment criteria in an ideal capital market......Page 160
27 Calculation of rates of return and of time preference......Page 162
28 Critique of the discounted present value criterion (I)......Page 166
29 Critique of the discounted present value criterion (II)......Page 171
30 The normalized compounded terminal value criterion (I)......Page 175
31 The normalized compounded terminal value criterion (II)......Page 180
32 The Pareto criterion and generational time......Page 184
Part VI: Notes on particular goods......Page 190
33 The value of time saved......Page 192
34 Measuring the benefits of recreational areas (I)......Page 196
35 Measuring the benefits of recreational areas (II)......Page 202
36 The value of life......Page 207
Part VII: Uncertainty......Page 216
37 Risk and certainty equivalence......Page 218
38 Game theory and decision rules (I)......Page 221
39 Game theory and decision rules (II)......Page 225
40 How practical are game theory decision techniques?......Page 231
41 Simple probability in decision making......Page 234
42 Mixed strategies in decision making......Page 237
43 Four additional strategems for coping with uncertainty......Page 241
Part VIII: Further notes......Page 250
44 A summing up......Page 252
Appendix 1: Brief historical background to CBA......Page 256
Appendix 2: The normative interpretation of a CBA......Page 258
Appendix 3: The alleged contradiction of the Kaldor–Hicks criterion......Page 260
Appendix 4: The problem of second-best......Page 264
Appendix 5: Origins of the Hicksian measures of consumer surplus......Page 268
Appendix 6: Marginal curve measures of consumer surplus......Page 273
Appendix 7: The concept and measure of rent......Page 280
Appendix 8: Marginal curve measures of rent......Page 285
Appendix 9: The limited applicability of property rights......Page 290
Appendix 10: The rate of time preference......Page 292
Appendix 11: Selecting a set of investment projects for given political objectives......Page 295
Appendix 12: The value of human life......Page 299
Appendix 13: Deadweight loss or love’s labour lost......Page 301
Appendix 14: CBA and the problem of locating environmentally noxious facilities – an informal discussion......Page 305
Bibliography and further reading......Page 315
Index......Page 324