Lecture 21 April 24 - b Highest net bene³t(bene³ts minus...

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Lecture 21 April 24, 2014 Goals: Understand the basic principles & process of cost-benefit analysis Consider some critiques Explore values that may not get prioritized in cost-benefit analysis First, Natural resources major (senior) talked about economic decisions of North Dakota (mostly environmental) She is concerned with farmers/ranchers not enrolling with CRP where people can enroll to not use their lands for farming/ranching for a set amount of time to receive a sum from the feds She thinks that the oil revenue should be redirected to nature and resources (clean water, wildlife & parks) (Based a lot of it on the Minnesota program implemented a few years ago) **Why not spend the surplus on something more important, such as the homelessness and suffering that was talked about last week?? REAL LECTURE! 4. Choose among projects a. Most will look like: i. Shouldn’t we? ii. Should we – Option A iii. Should we – Option B
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Unformatted text preview: b. Highest net bene³t (bene³ts minus costs) (Give advantages to big projects) c. Cost-e±ecTveness analysis – agree on a goal, ³gure out best way to achieve that d. Biggest net bene³t raTo (net bene³ts divided by costs) CriTques 1. Not as objecTve as it might seem. (“nonsense on sTlts”) (she really doesn’t know what that means, but it was catchy) a. Hard to assign monetary value to nonmonetary outcomes b. Choosing discount rates, Tme ranges c. Relying on total net bene³t d. In´uence of decision rules e. ²hese things make people want to just expose the subjecTvity of the decisions and roll with that instead of hiding behind a mask of objecTvity 2. Ignores distribuTve quesTons 3. Economic values>poliTcal values (Go over the for discussion on page 437 #1-5) Essay opportunity 4 handed out! Draf due Monday; Fnal paper due May 1 (Thursday)...
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