Learning Outcomes
Cost Benefit Analysis, CBA, is a method that is used in various sectors in society to evaluate that total effect of a project or a policy. The method is based on economic welfare theory. After completed course the students will:
- understand economic welfare theory and its connection to CBA
- understand the theoretical basis for and be able to use different methods to measure the effect on producers
- understand the theoretical basis for and be able to use different methods to measure the effect on consumers
- understand the theoretical basis for and be able to use different methods to measure the effect on factor suppliers
- understand how peoples’ preferences for non-market goods can be measured.
- understand and be able to evaluate how the effects of a policy can be measured in the presence of market interventions, such as taxes and subsidies, or when a policy influences the outcome in several market
- understand and be able to implement discounting
- understand and be able to use different methods to account for uncertainty and the effect of different market imperfections in a CBA
- be able to perform a simple CBA on their own in a spreadsheet program.
- understand economic welfare theory and its connection to CBA
- understand the theoretical basis for and be able to use different methods to measure the effect on producers
- understand the theoretical basis for and be able to use different methods to measure the effect on consumers
- understand the theoretical basis for and be able to use different methods to measure the effect on factor suppliers
- understand how peoples’ preferences for non-market goods can be measured.
- understand and be able to evaluate how the effects of a policy can be measured in the presence of market interventions, such as taxes and subsidies, or when a policy influences the outcome in several market
- understand and be able to implement discounting
- understand and be able to use different methods to account for uncertainty and the effect of different market imperfections in a CBA
- be able to perform a simple CBA on their own in a spreadsheet program.
Course Content
This course aims at giving the students knowledge about the economic welfare theory that is the basis for the use of CBA. The course starts with a discussion of welfare economics and its influence on the use of CBA. Moreover basic concepts such as Pareto optimality and social welfare functions are discussed. Thereafter various ways to measure the effects on producers, consumers and factor suppliers are introduced. The exercise that the students are expected to work with during the course is also handed out at this stage.
In the second half of the course the focus is on the practical problems that are connected to the use of CBA. In this part are discussed the effects of market interventions and market failures as well as uncertainty, lack of information and distributional aspects. Furthermore, the use of discounting as a way to account for the fact that benefits and cost occur at different periods in time is discussed.
In the second half of the course the focus is on the practical problems that are connected to the use of CBA. In this part are discussed the effects of market interventions and market failures as well as uncertainty, lack of information and distributional aspects. Furthermore, the use of discounting as a way to account for the fact that benefits and cost occur at different periods in time is discussed.
Assessment
The assessment is composed of two parts, assignments and a written exam.
Forms of Study
The course contains lectures and exercises.
Grades
The Swedish grades U–VG.
Prerequisites
- Equivalent of a bachelor’s degree in economics. Students registered on the one-year master’s programme in economics or other master’s program at the School of Economics and Social Sciences are also eligible for this course after special individual examination.
Other Information
The points collected in the assignments can only be saved for 13 months starting from the beginning of the course.
The student is entitled to four resits.
The student is entitled to four resits.
Literature
- Anthony E. Boardman .... (2006) Cost-benefit analysis : concepts and practice. Upper Saddle River, N.J. : Prentice Hall. (560 p). ISBN 0-13-143583-3
Note: latest edition - In addition to a set of papers.
Other: (approx. 70 pp)