Learning Outcomes
After completing the course the students will be able to:
- explain economic welfare theory and its connection to CBA. (1)
- explain the theoretical basis for and be able to use different methods to measure the effect of an action on producers and consumers. (2)
- evaluate how the effects of a policy can be measured in the presence of market interventions, such as taxes and subsidies, or when a policy influences the outcome in several market. (3)
- implement discounting. (4)
- use different methods to account for uncertainty and the effect of different market imperfections in a CBA. (5)
- perform a simple CBA on their own in a spreadsheet program and present the resultas orally and in a written report. (6)
Course Content
This course aims to give the students knowledge about the economic welfare theory that is the basis for the use of CBA. The course starts with a discussion of welfare economics and its influence on the use of CBA. Moreover basic concepts such as Pareto optimality and social welfare functions are discussed. Thereafter various ways to measure the effects on producers, consumers and factor suppliers are introduced. The exercise that the students are expected to work with during the course is also handed out at this stage.
In the second half of the course the focus is on the practical problems that are connected to the use of CBA. In this part the effects of market interventions and market failures as well as uncertainty, lack of information and distributional aspects are discussed. Furthermore, the use of discounting as a way to account for the fact that benefits and cost occur at different periods in time is discussed.
In the second half of the course the focus is on the practical problems that are connected to the use of CBA. In this part the effects of market interventions and market failures as well as uncertainty, lack of information and distributional aspects are discussed. Furthermore, the use of discounting as a way to account for the fact that benefits and cost occur at different periods in time is discussed.
Assessment
Assessment is via a written examination which is equivalent to 6 credits (U-VG) and an assignment with accompanying seminar equivalent of 1.5 credits (U-G). The latter involves performing a simple CBA presented in a written report and orally in a seminar. The written exam examines learning 1 to 5, while the assignment with accompanying seminar examines the primary the learning outcome 6.
Forms of Study
The course consists of lectures, work with an assignment and associated seminar.
Grades
The Swedish grades U–VG.
Prerequisites
- Introductory Macroeconomics - Undergraduate Course, 7,5 credits
- Microeconomics - Undergraduate Course 7,5 credits
- Statistics, 7.5 credits
Other Information
The maximum numbers of exam occasions are five.
Literature
- Boardman et al. (2011) Cost-benefit analysis: concepts and practice. . 4 ed. Pearson. (540 p). ISBN 0-13-231148-8
- In addition to a set of papers.
Other: (approx. 70 pp)