A Partial Review of Seven Official Guidelines for Cost-Benefit Analysis

2020 ◽  
Vol 11 (2) ◽  
pp. 272-293 ◽  
Author(s):  
Peter Abelson
Keyword(s):  
Environmental Protection Agency ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Economic Benefits ◽  
Benefit Analysis ◽  
Social Discount Rate ◽  
Protection Agency ◽  
The Social ◽  
Benefit Cost ◽  
Over Time

AbstractThis paper reviews seven contemporary official guidelines to cost-benefit analysis (CBA) with respect to eight major cost-benefit issues drawing on the latest edition of the major CBA textbook for guidance, although not complete authority. The guidelines are those by UK Treasury, European Commission, U.S. Environmental Protection Agency, New Zealand Treasury, Infrastructure Australia, NSW State Treasury, and Victorian State Department of Treasury and Finance. The eight major issues discussed are the issue of standing, core valuation principles, the scope of CBA with reference to potential additional economic benefits, changes in real values over time, the marginal excess tax burden, the social discount rate, use of benefit-cost ratios, and treatment of risk. While all the guidelines are quality guides to CBA, the paper finds that there is room for improved discussion and practice at various points in each of these guidelines.

Gamma Discounting

2001 ◽  
Vol 91 (1) ◽  
pp. 260-271 ◽  
Author(s):  
Martin L Weitzman
Keyword(s):  
Probability Distribution ◽  
Discount Rate ◽  
Theoretical Approach ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Wide Spread ◽  
Social Discount Rate ◽  
Numerical Example ◽  
Over Time

By incorporating the probability distribution directly into the analysis, this paper proposes a new theoretical approach to resolving the perennial dilemma of being uncertain about what discount rate to use in cost-benefit analysis. A numerical example is constructed from the results of a survey based on the opinions of 2,160 economists. The main finding is that even if every individual believes in a constant discount rate, the wide spread of opinion on what it should be makes the effective social discount rate decline significantly over time. Implications and ramifications of this proposed “gamma-discounting” approach are discussed. (JEL H43)

scholarly journals Controlling Tsetse Flies and Ticks Using Insecticide Treatment of Cattle in Tororo District Uganda: Cost Benefit Analysis

2021 ◽  
Vol 8 ◽  
Author(s):  
Walter O. Okello ◽  
Ewan T. MacLeod ◽  
Dennis Muhanguzi ◽  
Charles Waiswa ◽  
Susan C. Welburn
Keyword(s):  
Epidemiological Study ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Economic Benefits ◽  
Tsetse Flies ◽  
Cattle Population ◽  
Benefit Analysis ◽  
Post Intervention ◽  
Incremental Benefit ◽  
Benefit Cost

Background: The endemic vector-borne diseases transmitted by tsetse and ticks impose heavy burdens on the livestock keepers in Africa. Applying deltamethrin to the belly, legs, and ears of cattle offers a possibility of mitigating these losses at a cost affordable to livestock keepers. Although studies have quantified the impacts of individual diseases on livestock productivity, little is known about the dual economic benefits of controlling both tsetse and ticks, nor about the number of cattle that need to be treated to confer these benefits. Alongside an epidemiological study in south-east Uganda, a farm level assessment was done to investigate the benefits and costs of spraying different proportions of the village cattle population using this restricted application protocol.Methods: A study comprising 1,902 semi-structured interviews was undertaken over a period of 18 months. Financial data on household income and expenditure on cattle was collected, and cost-benefit analysis was done pre- and post-intervention and for different spraying regimes. The total cost of the intervention was obtained from the implementation costs of the epidemiological study and from expenses incurred by participating farmers enabling examination of benefit-cost ratios and incremental benefit-cost ratios for each treatment regime.Results: The benefit-cost analysis of spraying 25%, 50%, and 75% of the cattle population yielded average benefit-cost ratios of 3.85, 4.51, and 4.46. The incremental benefit-cost ratios from spraying each additional 25% of the cattle population were 11.38, 3.89, and 0.79, showing a very high return on investment for spraying 50% of the population, with returns reducing thereafter.Conclusion: Comparing the gross margins per bovine, the study found that increasing the proportion of cattle sprayed yielded increasing benefits to the farmers, but that these benefits were subject to diminishing returns. From a practical viewpoint, this study recommends spraying only draft cattle to control trypanosomiasis and tick-borne diseases in this area as they make 38.62% of the cattle population, approaching the 50% threshold. In areas with a lower proportion of draft males, farmers could be advised to also include cows.

scholarly journals A Review of Approaches to Construct Social Discount Rate

2016 ◽  
Vol 8 (4-3) ◽  
Author(s):  
Ai-Jiun Chua ◽  
Weng-Wai Choong
Keyword(s):  
Discount Rate ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Social Costs ◽  
Benefit Analysis ◽  
Costs And Benefits ◽  
Social Discount Rate ◽  
Public Projects ◽  
The Social ◽  
Social Costs And Benefits

There is increasing concern on how public projects are being evaluated especially for public projects that bring impacts towards the economic, social and environmental of the nation in the long-term, for example infrastructural, environmental protection, energy efficiency, healthcare, education expenditures and others. Thus, the federal government and state government recommend project assessors to adopt cost-benefit analysis for major infrastructure and social investment as well as for regulatory initiatives. Cost benefit analysis has been widely used as a tool to enable stakeholders to make a better decision for projects by systematically comparing the social costs and benefits with the emphasis on valuing them in monetary term. One of the most significant parameters for cost benefit analysis is the social discount rate. It is a rate that used to convert the future social costs and benefits into present value. However, there is a long-time debate on how to construct appropriate social discount rate. Literature reveals that there are various popular approaches to construct social discount rate, such as Social Time Preference (STP) approach, Social Opportunity Cost of Capital (SOC), and Shadow Price of Capital (SPC). The selection of approaches is a significant process to construct an appropriate social discount rate for the project. In this paper, author examines theoretical for each approach and procedures to construct social discount rate. A framework will be developed to guide the assessor in selecting the approaches to construct social discount rate. This paper intends to review social discount rate construction approaches and the pros and cons of each approach. The paper would provide insight to assessor in selecting the approach in construction social discount rate. 

Cost–benefit analysis and the environment

1997 ◽  
Vol 2 (2) ◽  
pp. 195-221
Author(s):  
ANANDARUP RAY
Keyword(s):  
Public Policy ◽  
Environmental Impact ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Economic Benefits ◽  
Benefit Analysis ◽  
Benefit Cost Analysis ◽  
Regulatory Policies ◽  
Benefit Cost ◽  
Benefits And Costs

The thrust of the principles enunciated in Arrow et al. is that economic benefits and costs can be a great help in organizing disparate concerns, in identifying issues, and in designing regulatory policies and individual projects with environmental impact. While this true, I must disagree with the authors that 'formal benefit-cost analysis should not be viewed as either necessary or sufficient for designing sensible public policy' (p. 201). At least there can be little doubt that cost-benefit analysis is necessary for sensible policy. I comment below from the perspective of devloping countries.

scholarly journals Controlling tsetse flies and ticks using insecticide treatment of cattle in Tororo district Uganda: cost benefit analysis 

2021 ◽  
Author(s):  
Walter O. Okelo ◽  
Ewan T. MacLeod ◽  
Dennis Muhanguzi ◽  
Susan C. Welburn
Keyword(s):  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Economic Benefits ◽  
Tsetse Flies ◽  
Cattle Population ◽  
Benefit Analysis ◽  
Structured Interviews ◽  
Post Intervention ◽  
Incremental Benefit ◽  
Benefit Cost

Abstract BackgroundThe endemic vector-borne diseases transmitted by tsetse and ticks impose heavy burdens on Africa’s livestock. Cattle offers the possibility of mitigating these losses at a cost affordable to livestock keepers, by applying deltamethrin just to the belly, legs and ears of cattle. Although studies have quantified the impacts of individual diseases on livestock productivity, little is known about the dual economic benefits of controlling both tsetse and ticks, nor about the number of cattle who need to be treated to confer these benefits. Alongside an epidemiological study in south-east Uganda, a farm level assessment was done to investigate the benefits and costs of spraying different proportions of the village cattle population using this restricted application protocol. MethodsA study comprising 1,902 semi-structured interviews was undertaken over a period of 18 months. Financial data on household income from and expenditure on cattle was collected and cost benefit analysis done, pre and post intervention and for different spraying regimes. The total cost of the intervention was obtained from the epidemiological study’s implementation costs and from expenses incurred by participating farmers enabling examination of benefit-cost ratios and incremental benefit-cost ratios for each treatment regime. ResultsThe benefit-cost analysis of spraying 25%, 50% and 75% of the cattle population yielded average benefit-cost ratios of 1.55, 3.85, 4.51 and 4.46. The incremental benefit-cost ratios from spraying each additional 25% of the cattle population were 11.38, 3.89 and 0.79 respectively, showing a very high return on investment for spraying 50% of the population, with returns reducing thereafter. ConclusionComparing the gross margins per bovine, the study found that increasing the proportion of cattle sprayed yielded increasing benefits to farmers, but that these benefits were subject to diminishing returns. From a practical viewpoint this study recommends spraying only draft cattle to control trypanosomiasis and tick-borne diseases in this area as they make 38.62% of the cattle population, approaching the 50% threshold. In areas with a lower proportion of draft males, farmers could be advised to also include cows.

Age 21 Cost-Benefit Analysis of the Title I Chicago Child-Parent Centers

2002 ◽  
Vol 24 (4) ◽  
pp. 267-303 ◽  
Author(s):  
Arthur J. Reynolds ◽  
Judy A. Temple ◽  
Dylan L. Robertson ◽  
Emily A. Mann
Keyword(s):  
Title I ◽  
Remedial Education ◽  
Program Effectiveness ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Well Being ◽  
Economic Benefits ◽  
School Age ◽  
Program Participation ◽  
Benefit Analysis

We conducted the first cost-benefit analysis of a federally financed, comprehensive early childhood program. The Title I Chicago Child-Parent Centers are located in public schools and provide educational and family support services to low-income children from ages 3 to 9. Using data from a cohort of 1,539 program and comparison-group children born in 1980 who participate in the Chicago Longitudinal Study, measures of program participation were significantly associated with greater school achievement, higher rates of high school completion, and with significantly lower rates of remedial education services, juvenile delinquency, and child maltreatment. Economic analyses indicated that the measured and projected economic benefits of preschool participation, school-age participation, and extended program participation exceeded costs. In present-value 1998 dollars, the preschool program provided a return to society of $7.14 per dollar invested by increasing economic well-being and tax revenues, and by reducing public expenditures for remedial education, criminal justice treatment, and crime victims. The extended intervention program (4 to 6 years of participation) provided a return to society of $6.11 per dollar invested while the school-age program yielded a return of $1.66 per dollar invested. Findings demonstrate that an established public program can provide benefits that far exceed costs. Key elements of CPC program effectiveness include an instructional focus on literacy, opportunities for intensive parent involvement, and implementation by well-trained staff within a single administrative system.

The social valuation of income: a survey approach

2014 ◽  
Vol 41 (6) ◽  
pp. 808-820 ◽  
Author(s):  
David John Evans ◽  
Erhun Kula ◽  
Yoko Nagase
Keyword(s):  
Political Parties ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Statistical Testing ◽  
Survey Method ◽  
Benefit Analysis ◽  
Content Type ◽  
The Social ◽  
Social Valuation ◽  
Survey Approach

Purpose – The purpose of this paper is to estimate survey-based values of the elasticity of marginal social valuation of income, an important welfare parameter in cost-benefit analysis. Design/methodology/approach – A model relating equity welfare weights to income is developed, and iso-elasticity of marginal valuation of income is tested using survey data obtained from a sample of Turkish politicians who are instrumental in policy making. Findings – Based on the survey feedback, formal statistical testing indicates that Turkish politicians, regardless of party allegiance, reveal preferences consistent with an iso-elastic marginal social valuation of income. The estimated value of the elasticity measure is close to unity for each of the political parties. Originality/value – The originality of the paper is in terms of the survey method used to obtain from Turkish politicians estimates of the marginal social valuation of income. This welfare parameter is needed in the calculation of both social discount rates and welfare weights. The paper will be of interest to academics in the field of welfare economics as well as to practitioners involved in the appraisal of social projects and policies.

Inclusion of Social Subsystem Issues in IT Investment Decisions

2011 ◽  
pp. 164-183
Author(s):  
Sherry D. Ryan ◽  
Michael S. Gates
Keyword(s):  
Survey Data ◽  
Decision Process ◽  
Cost Benefit Analysis ◽  
Investment Decisions ◽  
Cost Benefit ◽  
Decision Makers ◽  
Benefit Analysis ◽  
Analysis Model ◽  
Decision Criteria ◽  
The Social

Researchers have attempted to augment the traditional cost/benefit analysis model used in the IT decision process. However, frequently social subsystem issues are inadequately considered. Survey data, collected from a U.S. sample of 200 executives, provides an empirical assessment of how these issues compare with other IT decision criteria given differing decision types. The social subsystem issues considered most important by decision makers are also identified and the manner by which they consider these issues is investigated.

Cost-Benefit Analysis of Seismic Mitigation Measures for Wine Barrel Stacks

2018 ◽  
Vol 34 (1) ◽  
pp. 283-299
Author(s):  
Miguel A. Jaimes ◽  
Gabriel Candia ◽  
Philomène Favier
Keyword(s):  
Seismic Risk ◽  
Performance Metrics ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Mitigation Strategies ◽  
Wine Industry ◽  
Mitigation Measures ◽  
Illustrative Case ◽  
Benefit Analysis ◽  
Benefit Cost

This study conducts a cost-benefit analysis of alternative seismic risk mitigation methods for wine barrel stacks. The Chilean wine industry is presented as an illustrative case study in which performance metrics, such as the expected annual loss (EAL) and benefit-cost ratios, are computed for wineries at different locations. By computing seismic risk within a consistent framework, this study shows the value of cost-benefit simulations for defining the best mitigation strategies and allocating economic resources. Likewise, this approach helps communicate information to decision makers because it is presented in a simple and transparent way, even if they are not familiar with formal risk studies. For three-level wine barrel stacks, it was observed that the Cradle Extender® (MS1) prevents a large number of barrel collapses and provides the highest benefit-cost ratio. On the other hand, for six-level wine barrel stacks, the prestressed cable (MS2) is more effective than MS1 as it prevents the barrel stack from overturning. No significant loss reduction is apparent in four- and five-level wine barrel stacks with the use of mitigation strategies; indeed, the mitigation strategies could generate greater losses and, therefore, other alternatives must be proposed.

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