Cost-BenefitAnalysis(CBA)-OregonState.pptVIP

COST-BENEFIT ANALYSIS Cost-Benefit Analysis Cost-benefit analysis (CBA) is the implicit or explicit assessment of the benefits and costs (i.e., pros and cons, advantages and disadvantages) associated with a particular choice. Benefits and costs may be monetary (pecuniary) or non-monetary (non-pecuniary, “psychic”). Theory of Cost-Benefit Analysis Public Policy Objective: Choose the level of output of a good or service to maximize net social benefits (NSB) NSB = TSB – TSC where TSB = total social benefits TSC = total social costs 2. Willingness-to-pay (WTP) Approach Value of life is esti