CHAPTER 1

An Introduction to Cost Benefit Analysis

The very need to weigh benefits against costs-the essence of economicsis evaded by the irresponsible exercise of arrogance.

Thomas Sowell

Chapter 1 Preview

When you have completed reading this chapter you will:

•   see this book as a practical guide for decision-makers charged either with performing or interpreting basic cost benefit analysis (CBA);

•   be aware of project proposals for which CBA is and is not an appropriate decision tool;

•   know why government project assessment requires different tools than private project assessment;

•   realize that objective decision making is based on considering foregone options, minimizing costs, and using scarce resources to produce what residents ...

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