Cost-benefit analysis is the method for determining whether a particular project or policy is socially worthwhile. The positive impacts are reduced to their monetary equivalents and discounted back to the base time. The sum is these values is called the social benefits of the project. The corresponding negative impacts lead to the social costs of the projects. If the social benefits exceed the social costs the project is socially worthwhile. The site provides the theory and examples of cost-benefit analysis.
Type of Material:
Reference Material
Recommended Uses:
Can use as a homework assignment
Can have students use as reference
Can use in-class and have groups discuss
Can review in class and provide different numbers for calculations
Technical Requirements:
Browsers: Internet Explorer, Chrome & Firefox
Identify Major Learning Goals:
To understand what cost-benefit analysis is
To learn that the valuation of benefits and costs should reflect preferences revealed by choices which have been made
To learn how to use the demand curve to calculate the cost-benefit analysis
To understand the importance of considering the impacts of a project and a with-and-without comparison.
Target Student Population:
Students taking Introduction to Economics at middle or high school and/or community college.
Students taking Introduction to Microeconomics or Principles of Microeconomics at community college or university level
Students in general business classes
Prerequisite Knowledge or Skills:
None
Content Quality
Rating:
Strengths:
Provides history of cost-benefit analysis
Provides exellent examples using actual numbers
Offered by a university, so reliability is high
The content provided is succinct if the goal is to use it to engage in a 1-time discussion on the topic.
Concerns:
All on one page, so have to page down
Could be organized better
Other, simpler examples would make it more understandable
Potential Effectiveness as a Teaching Tool
Rating:
Strengths:
Provides in-depth discussion
Provides several examples to illustrate how numbers interact
Covers present value issue
Good summary
Concerns:
History of cost-benefit analysis is at the beginning of the article, but also at the end. Should end with the summary
Very wordy
The example provided is a local example
No learning objectives
Ease of Use for Both Students and Faculty
Rating:
Strengths:
All on one page, so easy to read
Covers large amount of material
Concerns:
Would be helpful if charts were wrapped by text
Colors are very distracting, i.e., don't use Red for titles and sub-titles. Pink and blue colors are hard to read
Looks like definitions are provided but links don't work
At least one reference link does not work
Creative Commons:
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