Economics 110 Cost-Benefit Analysis

Transcription

1 CALIFORNIA STATE UNIVERSITY, SACRAMENTO Department of Economics Spring 2015 Prof. Terri Sexton 3018 Tahoe Hall (916) Hours: TTh 9:00-10:30 AM Economics 110 Cost-Benefit Analysis This course links economic theory with policy analysis, using the tools of costbenefit analysis (CBA). As a formal assessment of a policy s costs and benefits, CBA attempts to measure and compare the economic efficiency of policy options. This type of analysis has become standard practice in policy areas such as the provision of public goods, government regulation, and taxation. The goal of the course is to provide you with the conceptual foundations and practical skills you will need to be thoughtful consumers and producers of CBA. At the conclusion of the semester, you will not only know how to conduct a CBA, but you will also understand its limitations. You will come away with a deeper understanding of how economics can inform policy; how one might begin to measure the many and varied effects of our laws, regulations, and government programs; and ultimately how to evaluate and compare alternative policies. Prerequisites Econ 1B and familiarity with Microsoft Excel are required. Required Reading Reading assignments are from the text Cost-Benefit Analysis: Concepts and Practice, 4th edition, by Anthony A. Boardman, David H. Greenberg, Aidan R. Vining, and David L. Weimer, published by Prentice Hall, Earlier editions or electronic versions of this text will also suffice and may be available at a lower cost from various online venders. Class Format Class meetings will consist of a mix of lectures, class discussion, and in-class exercises. Students are expected to attend class prepared to participate in class discussions. Completion of assigned readings is expected in order to ensure high quality discussions. Attendance is necessary, though not sufficient, for successful completion of this course and attendance will be taken on a random basis. Please arrive to class on time with electronic devices turned off. I will use SacCT to provide course handouts, lecture notes, and practice problem sets. 1

2 Course Requirements and Assignments Students are expected to adhere to the University Student Code of Conduct outlined in the CSUS University Policy Manual ( and should be aware of the university guidelines on plagiarism ( Class Participation (5%) I value both attendance and positive participation. Class time will be split between lectures, in-class exercises, and discussions. For this format to be effective, you must be prepared to participate in activities and discussions, both of which will generally incorporate the readings and practice problems assigned for that day. So please come prepared: do the readings, do (or at least attempt) the practice problems, and bring your questions, comments, and thoughts. Exam 1 (30%) The first exam, scheduled on Thursday, February 26, will be an in-class exam covering all of the course material up to that point. Your best preparation will be to come to class consistently and do the readings and practice problems. Exam 2 (30%) The second exam, scheduled on Tuesday, April 14 will be an in-class exam covering course material since Exam 1. Your best preparation will be to come to class consistently and do the readings and practice problems. Final Exam (35%) The final exam will be a comprehensive take-home exam that will require the use of Microsoft Excel. The exam will be posted on SacCT on Thursday May 14 and will be due at Noon on Thursday May 21. Practice Problem Sets (0%) You are not required to turn in the problem sets. They will be posted on SacCT and are designed to help reinforce the concepts from class and prepare you for the exams. We will work through some of them in class and I will post solutions to all of them on SacCT. Students with documented learning disabilities or special needs should contact me at least a week in advance of scheduled exams if arrangements through the Testing Center are required. 2

3 Course Grade The letter grade you receive in this course will be based on a grading scale to be determined by the class curve. This scale may or may not coincide with the standard 10- point scale (e.g., % is an A, 80-89% is a B, etc.). I will provide feedback throughout the semester on the class curve so that you can track your progress. Make-up Exam Policy Exams cannot be rescheduled or made up except for documented medical emergencies or documented absences due to active military or jury duty. In all such cases, I need to be notified PRIOR to the scheduled exam so that appropriate arrangements can be made. 3

4 TENTATIVE COURSE SCHEDULE DATE TOPIC REQUIRED READING T Jan. 27 Overview of Cost-Benefit Analysis Chapts. 1 & 2 Th Jan 29 " " T Feb. 3 Foundations of Welfare Economics: Consumer, Producer, and Social Surplus Chapt. 3 Th Feb. 5 " " T Feb. 10 Measuring Benefits and Costs of Market Goods & Services Using Known Demand & Supply Curves in Primary Markets Chapt. 4 Th Feb. 12 " " T Feb. 17 " " Th Feb. 19 T Feb. 24 Measuring Benefits and Costs of Market Goods & Services Using Known Demand & Supply Curves in Secondary Markets Review Chapt. 5 Th Feb. 26 Exam 1 Chapts. 1-5 T Mar. 3 Discounting Future Benefits and Costs Chapt. 6 Th Mar. 5 " " T Mar. 10 Uncertainty and Sensitivity Analysis Chapt. 7 Th Mar. 12 " " T Mar. 17 The Social Discount Rate Chapt. 10 Th Mar. 19 " " T Mar. 24, Th Mar. 26 T Mar. 31 SPRING BREAK Cesar Chavez Holiday, No Class Th Apr. 2 Measuring Benefits & Costs Using Experimental & Quasi-Experimental Methods, No Class Chapt. 12 T Apr. 7 " Chapt. 12 4

5 DATE TOPIC REQUIRED READING Th Apr. 9 Review T Apr. 14 Exam 2 Chapts. 6, 7, 10, 12 Th Apr. 16 Measuring Benefits & Costs: Indirect Market Methods Chapt. 14 T Apr. 21 " " Th Apr. 23 " " T Apr. 28 Survey Methods: Contingent Valuation Chapt. 15 Th April 30 " " T May 5 Shadow Prices Chapt. 16 Th May 7 " " T May 12 Evaluation of CBA Chapt. 20 Th May 14 Wrap-up 5