ECO 3660. Benefit-Cost Analysis

Fall 2008 | Calendar

TR 11:00-12:15, Raley Hall 3013

Instructor: John Whitehead
Raley Hall 3094
Office Hours: MW 9-11, 2-4; appointment, open door
Phone: 262-6121 (office), 262-2148 (department)
Fax: 262-6105

Last Update: 09/11/2008

Catalog Description

The study of the evaluation of competing public policy alternatives. The purpose of benefit-cost analysis is to inform government decision-making and facilitate the more efficient allocation of scarce resources. This course introduces the basic theory and principles of benefit-cost analysis and examines applications of the methodology. Prerequisite: ECO 2030.

Textbook and Reading Assignments

Cost-Benefit Analysis, 4e, Boardman, Greenberg, Vining and Weimer

Course Outline / Reading Assignments

  1. Introduction (Chapter 1, pp. 1-17)
  2. Conceptual Foundations (Chapter 2, pp. 26-33, 35-39, 41-46)
  3. Theory (Chapter 3, pp. 51-61)
  4. Markets (Chapter 4, pp. 73-98, 103-106)
  5. Benefit Estimation (Chapter 12, pp. 314-329, Appendix)
  6. Revealed Preference Methods (Chapter 13)
  7. State Preference Methods (Chapter 9, 14)
  8. Benefit Transfer
  9. Discounting (Chapter 6, pp. 131-140, 145, 146-151), (Chapter 10, pp. 236-238, 247-253, 245-246, 258-261)
  10. Dealing with Uncertainty (Chapter 7 pp. 165-171, 175-184)
  11. How Accurate is CBA?

Recommended Reading

  • Dumas, Schuhmann and Whitehead, AFS Symposium, 2005 [PDF].
  • Graham, REEP, 2007 [PDF].
  • Hahn, Journal of Economic Perspectives, 1998 [PDF].
  • Hahn and Dudley, REEP, 2007 [PDF].
  • Rose, et al., Natural Hazards Review, 2007 [PDF].
  • OMB, 2007 Final Report to Congress on the Costs and Benefits of Federal Regulations [PDF].


The grades are based on the homework assignments, three exams and a group project. The maximum number of points is 500. Final grades will be assigned as follows:

Grade A A- B+ B B- C+ C C- D+ D D- F
% 92 90 88 82 80 78 72 70 68 62 60 below 60
Points 460 450 440 410 400 390 360 350 340 310 300 below 300


There are three exams during the semester -- two in-class exams and a final exam administered during the final exam period. Each exam is worth 100 points. A university excused or emergency absence is usually necessary to schedule a make-up exam. Each exam is graded on a 100 point scale.

Homework Assignments

There are a number of homework assignments during the semester worth 100 points in total. These will generally involve questions at the back of the textbook chapters.


There is one project during the semester worth 100 points. Teams of students will form during the semester. The division of labor within the team will be determined by the team members. If shirking becomes a problem, a Survivor-style vote will expel individual members of the group. Group castoffs will be assigned an onerous individual project. The project grade will be based on a group presentation and an individual paper. More detail can be found here: project.

Note: What is plagiarism?


Class Attendance: From the catalogue: "It is the policy of Appalachian State University that class attendance is considered to be an important part of a student's educational experience. Students are expected to attend every meeting of their classes, and are responsible for class attendance."

Classroom behavior: The following classroom behaviors are not acceptable: excessive and/or loud chatting with other students, disruptive coming and going, answering your cell phone and other annoying behaviors.

Academic Dishonesty: It is the responsibility of every student to abide by the Appalachian State University Academic Integrity Code. In short: "Students will not lie, cheat, or steal to gain academic advantage."

Disabilty: "If you have a disability for which you are or may be requesting an accommodation, you are encouraged to contact both your instructor and the Office of Disability Services, 222 D.D. Dougherty, 262-3053/262-3056 (TTY) as early as possible in the term."

ASU Office Hours Policy: Every full-time faculty member is required to be available seven (7) hours per week during the regular academic year to consult with students. Requirements for part-time faculty will be prorated according to the number of hours taught. Each department will maintain an office hours policy that establishes standards regarding a mix among formal office hours, meetings in other locations, and electronic communications appropriate for faculty members and curricula in that department. A schedule indicating the times available for formal office hours, meetings in other locations, and electronic communications must be posted on the faculty member's office door, listed on course syllabi, and provided to the departmental office at the beginning of each semester. Electronic communication addresses, URLs, and/or phone numbers must be listed on course syllabi and also provided to the faculty member's departmental office. During the term of a summer session in which a faculty member teaches, office hours expectations are half of those during the regular academic year.

Last Update: 09/11/2008