Lecture12_15 - Lecture Note 12 Introduction to Social Cost Benet Analysis Part 2B Paper 1 Dr T.S Aidt University of Cambridge Michaelmas 2010 1

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Lecture Note 12: Introduction to Social Cost Part 2B: Paper 1. Dr. T.S. Aidt University of Cambridge Michaelmas 2010 1 Introduction of welfare economics. It is used by government around the world on a daily basis to make decisions of government-sponsored expenditure programmes and policies. It is used by the big international organizations, e.g., the World Bank and UN, to evaluate development aid projects, and it is even occasionally used contribution to enhance the quality of public sector decision making. But there are many pitfalls and lots of vested special interests involved in the decision making process who are more than willing to "bend the rules" if given the therefore essential to be able to judge the quality and reliability of any given yourself. There exists many manuals for how to do this and a battery of textbooks. analysis in the United Kingdom. The Little-Mirrlees manual lays out the prin- ciples of project evaluation in the context of less developed countries. This note practically orientated textbook ± I recommend Boardman et al., this should hopefully provide you with a solid foundation. The remarks on the literature at the end of the note provides a rough but more detailed guide to the literature. Disclaimer: This note may contain mistakes. If you spot any, please bring them to my attention. 1
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So what is it all about? In one word, it is about opportunity cost: The cost related to the next-best choice available to someone who has picked among way of comparing what would happen to social welfare with and without a project or policy in place. This allows us to isolate issues related to e¢ ciency from issues related to distri- the following assumptions: 1. Many identical consumers, h = 1 ;::;H . 2. There are two goods
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This note was uploaded on 06/04/2011 for the course ECONOMICS paper 1 taught by Professor Aidt during the Spring '11 term at Cambridge.

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Lecture12_15 - Lecture Note 12 Introduction to Social Cost Benet Analysis Part 2B Paper 1 Dr T.S Aidt University of Cambridge Michaelmas 2010 1

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