SPP/Economics 573: Benefit-Cost Analysis

Subject of the Course:

The aim of this course is to teach you how to do benefit-cost analysis. On one level, this is pretty simple: just sum all the benefits of a program, subtract all the costs, and there you are. If net benefits are positive, the program is a winner; if not, not. In choosing among programatic options, take the one with the highest level of net benefits.

But obviously there are complications. First, it is not always easy to measure benefits and costs -- you have to know some economics and perhaps even some philosophy. Second, bernefits and costs can occur at different times, and you have to adjust for that problem. Third, benefits and costs are received and borne by different people, and both the economics and the politics of dealing with distributional issues can get tricky. Fourth, there are many different types of programs for which an aspiring public servant might want to do a benefit-cost analysis. This list goes on, and it will easily fill a semester for us to cover it adequately.

Prerequisite:

SPP/Econ 555 or equivalent

Organization:

For Winter 1997, the course meets twice a week, Tuesdays and Thursdays, 8:30-10, in room 1309 SEB. The GSI for the course is Holly Anderson, and she will hold review sessions on alternate Fridays at a time and place to be announced.

Requirements:

Requirements for the course consist of a series of problem sets, a "case exercise," two in-class mid-term exams, and a term paper. There is no final exam.

The most important requirement for the course is the term paper, in which you will do a benefit-cost analysis on a topic of your choice. This will be done in two parts: a one page outline or prospectus due February 6, and the paper itself of 10-15 pages due on the last day of class, April 22. The paper topic must be approved by me, so come and talk to me about your paper ideas as early in the semester as possible. The paper may be done in groups, limited to 3 persons maximum (see Changes, Feb. 2), and you should be warned that grading will be slightly tougher in this case.

The schedule for the requirements and their contributions to your final grade are as follows:


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