When people make economic decisions, they usually weigh
the benefits with the costs to see if the outcome is worth the expense. Benefit-cost analysis tries to put the costs
and benefits into dollar amounts in order to compare them; the specific term is
generally related to government processes.
The process of benefit-cost analysis was first formed over 150 years ago
by the French engineer Jules Dupuit, though its first major use was in
the 1930s in the evaluation of the federal water projects, and has been used in
many government decisions since. When
government policy-makers weigh the benefits and costs of a policy in question,
they only take into account the values held by individual members of
society. Benefits are measured by how
willing people are to pay for what they get out of the policy, while the
measurement of costs is how much money would be needed to compensate for
negative outcomes.
Portney, Paul R. "Benefit-Cost Analysis." : The
Concise Encyclopedia of Economics. Liberty Fund, Inc., 2008. Web. 15 Dec.
2012.
O'Loughlin, Eugene. "Problem Solving Techniques #7:
Cost-Benefit Analysis." YouTube. YouTube, 18 Feb. 2010. Web.
15 Dec. 2012.
Alemanno, Alberto. "2011 Annual Meeting of the Society
for Benefit-Cost Analysis." - Alberto Alemanno. Muchbeta, 11 May
2011. Web. 15 Dec. 2012.
No comments:
Post a Comment