>From what I could see the discussion was mostly on the inapplicability of C/B >in principle, not just in practice.
Yesterday I read the Dept of Transp primer (for public officials) on C/B, and it acknowledges the propriety of externalities in the computation. Interestingly, the Office of Mgmt and Budget prescribes a real discount rate of 7%, which seems way high, but in at least some cases rates of 2.5 or 3 are permitted. Now I'm wondering how the masses with the encouragement of JD would derive shadow prices. >From: Jim Devine <[EMAIL PROTECTED]> >Date: 2007/11/15 Thu AM 10:08:31 CST >To: [email protected] >Subject: Re: How is cost-benefit analysis possible? >Max Sawicky wrote: >> If C-B is not possible, sports fans, how would your preferred from of >> government make a decision about whether or not to undertake a project? < > >it should be noted that there are at least two different kinds of C/B >analysis. There's the standard approach, where the authors usually >assume that market prices correspond to social costs and benefits and >that future benefits and costs should be discounted using interest >rates reflecting the short-term mentality of financial markets. > >there's also the general form of C/B, where all of the likely costs >and benefits are cataloged and then explicitly added up using >subjective weights (instead of sneaking in the assumption that the >market is the measure of all things). A special version of this would >use weights which are "shadow prices" based on democratically >agreed-upon priorities. > >-- >Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own >way and let people talk.) -- Karl, paraphrasing Dante.
