Overview

Drawing on the principles of welfare economics and public finance, this second edition of Cost-Benefit Analysis: Theory and Application provides the theoretical foundation for a general framework within which costs and benefits are identified and assessed from a societal perspective. With a thorough coverage of cost-benefit concepts and their underlying theory, the volume carries the reader through the steps of a typical evaluation process, including the identification, measurement, and comparison of costs and benefits, and project selection. Topics include alternative measures of welfare change, such as the concepts of consumer surplus and compensating and equivalent variation measures, shadow pricing, nonmarket valuation techniques of contingent valuation and discrete choice experiment, perspectives on what constitutes a theoretically acceptable discount rate, the social rate of time preference, income distribution, and much more. The book also focuses on real-world applications of cost-benefit analysis in two closely related areas—environment and health care—followed by an examination of the current state of the art in cost-benefit analysis as practiced by international agencies.

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9781498522526

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Reviews

Nas has been able to accomplish a difficult task - providing an understandable welfare economics foundation for those new to the subject and enough detail to make sure that these individuals are able to apply CBA to complex allocation problems such as climate change policy. All policy makers should read the book to better understand the power of CBA to address efficiency in exchange, production and allocation.--Wade Martin, California State University, Long Beach Benefit-Cost analysis is one of the most powerful economic tools for improving efficiency in government spending, but it is too little known and understood by both citizens and government decision-makers. In this second edition of his important book, Tevfik Nas provides a highly readable overview of the theory and method of selecting public investments that provide the largest return for taxpayers and the general population. The applications are particularly useful as illustrations of the potential of the benefit-cost approach.--Henry Levin, Director, National Center for the Study of Privatization in Education, Teachers College, Columbia University

Author Information

Tevfik F. Nas is professor of economics at the University of Michigan-Flint.

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