The Difficult Job of Cost-Benefit Analysis and Government Decision Making

This is another in the series of articles I have been writing on decision making. This article gives a brief overview of Cost-Benefit Analysis and why it is difficult to calculate and use as a method of decision making. To read more articles about decision making and a variety of other academic issues visit ITS Tutorial School. http://www.tuition.com.hk/information.htm
Cost benefit analysis is the method used by governments to decide what is a socially optimal output level of production of a specific good or service. When a project/decision is being considered by the government it needs to consider all the costs and benefits of this project. Cost are made up of private costs and external costs (external costs are costs to third parties not directly involved in the View the rest of this article