ECO 3660. Benefit-Cost Analysis

Instructor: John Whitehead
e-mail: whiteheadjc@appstate.edu

Fall 2008 | Calendar

1. Specify the set of alternative projects [determined during a meeting with your client]

2. Decide whose benefits and costs count (standing) [i.e., aggregation rules]

3. Catalog the impacts and select measurement indicators [qualitative benefits and costs, theory]

4. Predict the impacts quantitatively over the life of the project

5. Monetize (attach dollar values to) all market and non-market impacts [use elasticities, linear approximation, benefit transfer, estimates of costs, and surveys]

6. Discount benefits and costs to obtain present values [use more than one rate and justify your choice]

7. Compute the net present value of each alternative

8. Perform sensitivity analysis over uncertain issues

9. Make a recommendation

Early in the semester, upon identification of a research topic and a willing client, students will participate in a scoping meeting with each client. A series of homework exercises will lead students through the necessary tasks of BCA. Each student team will write a research report and present findings to the class and the client.

Report Guidelines

The report should include descriptions of each of the nine steps of a benefit-cost analysis.

Formatting:

• Typed

• Double-spaced

• 1" margins

• Times New Roman 12 point font

• 5-7 pages

• Attach all excel files electronically

• Include title page and references

Presentation Guidelines

• 10-12 minute MS PowerPoint presentations

• The first slide should be a title slide containing the title of your presentation, the date of the presentation, your names and your client.

• The presentation should include the information on each of the nine steps of a benefit-cost analysis. Do not include the excruciating details in your presentation (these are appropriate for your report).

• A good rule of thumb is one slide for each of the nine steps, except for the monetization step which will require more slides.

• PowerPoint Guidelines from Capital Univeristy.

• An example presentation (forthcoming)

References

1. Mangione, Thomas W., "The basics of question design," Chapter 2 in Mail Surveys: Improving the Quality, 1995 [PDF]
2. Ettner, Susan L., et al., "Benefit–Cost in the California Treatment Outcome Project: Does Substance Abuse Treatment 'Pay for Itself'?" Health Services Research 41(1):192-213, 2006. [PDF and Erratum]
3. Harless, David W. and Frank R. Allen, "Using the contingent valuation method to measure patron benefits of reference desk service in an academic library," College and Research Libraries 60(1), January 1999. (An example of a mini-BCA using a CVM study of students) [PDF]
4. Rodman, Ruey L., "Cost analysis and student survey results of library support for distance education," Journal of the Medical Library Association 91(1) January 2003. (An example of an almost-BCA) [PDF]
5. Whitehead, "A practitioner's primer on the CVM," Chapter 3 in Handbook on CVM, ed. by Alberini and Kahn, 2006. (tips on writing CVM questions) [PDF]

2008 Topics

1. University Housing: Space Allocation Issues, Client: Dr. Jeff Doyle
2. Outdoor Programs: Relocation of the Challenge Course, Client: Rich Campbell
3. Student programs: Adoption of energy efficient technologies, Client:
4. Creation of an engineering program, Client: Dr. Chris Thaxton
5. Creation of a nursing program, Client: Dr. Wanda Stutts