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Abstract

All major pubic finance texts offer some treatment of benefit-cost analysis. The typical treatment, however, glosses over the welfare economic foundations of modern benefit-cost analysis and therefore denies the student a broader view of the subject. The student might be misled to believe that, although some difficulties arise in the application of the benefit-cost techniques, the basic idea of conducting benefit-cost analysis is relatively noncontroversial. In addition, almost all textbooks give an incomplete treatment to the ranking of alternative projects, comparisons of alternative decision criteria, and other problems associated with benefit-cost analysis. This article attempts to address some of these gaps.

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Benefit-Cost Analysis: A Pedagogical Note

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