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Contents: Preface: Teaching benefit-cost analysis -- Part I: The big picture -- 1. Decision rules / William K. Bellinger -- 2. Triangles and all that / Arnold C. Harberger -- 3. Defining the baseline / Charles Griffiths and Chris Dockins -- 4. The concept of standing in benefit-cost analysis / Richard O. Zerbe -- 5. Partial equilibrium versus general equilibrium evaluations or small versus large projects / Per-Olov Johansson and Bengt Kristrom -- 6. BCA and US regulatory review: finding a market failure / Susan E. Dudley -- 7. The essentials: a short course for young professionals / Gelsomina Catalano and Massimo Florio -- Part II: Challenging concepts and examples -- 8. Valuing statistical lives / Lisa A. Robinson -- 9. The arithmetic of efficiency--or the value of marginal analysis / John Mendeloff -- 10. Treatment of employing and disemploying workers / David Greenberg -- 11. Uncertainty and risk / Nicholas Treich -- 12. On defining and valuing the benefits of health policy interventions / David Salkever -- 13. Harmful addiction / David Weimer -- 14. Supplementing benefit-cost analysis: models for transport and land use decisions / Emile Quinet -- 15. Evaluating knowledge projects and r&d infrastructures with an example / Massimo Florio and Chiara Pancotti -- 16. Cost estimation in education: the ingredients method / Clive Belfield, A. Brooks Bowden and Henry M. Levin -- 17. Distributional accounting in benefit-cost analysis / Kerry Krutilla -- 18. Case studies in the classroom: lessons learned / Stuart Shapiro -- 19. Simulation: incorporating uncertainty / Scott Farrow -- Index.

AbstractBorder management is a government activity affecting immigration and the economy. Benefit–cost and equivalent decision analyses are used to evaluate U.S. border management for 2017. Controversial issues arise. Among these are the issue of standing and the values of asylum, a criminal career, child custodial care, foreign deaths, fiscal and labor market effects, and distributional weighting. Sixteen unique shadow prices (imputed marginal value) are computed. Those shadow pries are combined with proportions and levels of border management outcomes. The aggregate result is not only a large expected present value net benefit per year from managed outcomes of $46.6 billion but also a large residual unmanaged annual cost of $23.7 billion. Significant uncertainty exists, but estimated net benefits remain positive.

The estimated impacts, benefits, and costs of legalizing slot machines in Maryland are analyzed building on and contrasting with results from an impact analysis. The analysis provides estimates of the components and the total net benefits to the state and its citizens; the role of uncertainty, distributional impacts, and a basic tax alternative. The results forecast mostly positive net benefits for Maryland both in comparison to doing nothing and in comparison to raising an equivalent amount in taxes. However, if slot revenue raised from the lower income population is given more weight, then doing nothing or raising taxes appears to be preferred.

The analysis of federal regulations focuses on the analysis of economic efficiency through standard benefit‐cost analysis in which reductions in risk tend to represent benefits and variability may be investigated through sensitivity or simulation methods. Such analyses typically ignore distributional consequences that can affect decisions. Although analytical guidance from the Office of Management and Budget (OMB) mentions distributional consequences, there is little specificity regarding how it might be analyzed. Specificity might be improved by OMB: (1) communicating and enforcing distributional impacts as more central to the process, (2) identifying default types of descriptive distributional statistics, (3) identifying whether legislation has created a constraint to not harm a subgroup, and (4) requesting a distributional sensitivity test of the net benefits along with a standard benefit‐cost analysis. Although such actions have a data collection and analysis cost, they may make the results of regulatory analysis more relevant by investigating both efficiency and equity measures.

While most economists expect some marginal conditions to result from basic expected value models involving government expenditures and homeland security investments, such models are not readily found in the literature. The article presents six basic models that all incorporate uncertainty; they also capture various problems involving technological limits, behavioral interactions, false negatives and false positives, and decision making with uncertainty and irreversibility. Recent reviews of homeland security programs by the U.S. Government Accountability Office are used to illustrate the relevance of the models.(JEL H100)

Risk assessment is an established methodology for environmental and public health issues. However, economists' core approach to both risk assessment and risk management, benefit‐cost analysis, often fails to transparently evaluate variability in a way that is a trademark of quantitative risk assessment. Concurrently, environmental advocates are proposing new management criteria based on a vaguely framed "Precautionary Principle." This manuscript demonstrates how risk assessment techniques for characterizing variability, benefit‐cost analysis, and decision‐making criteria under uncertainty and irreversibility can be combined. The result is a quantifiable, case‐specific, and risk‐dependent "precautionary" threshold for action compared to standard benefit‐cost approaches. The Clean Air Act and the regulation of genetically modified corn provide applications.

Economic instruments such as taxes and tradable permits have been promoted as efficiency improving policies in the transition economies of Central and Eastern Europe and elsewhere. The little noticed potential for a symmetric equity impact from the two instruments in a world without distortions is first discussed. A specific policy option is suggested in which existing environmental taxes in Central and Eastern Europe can be increased without imposing additional financial burdens in industry if appropriate tax credits are provided. Second, conditions in Central and Eastern Europe are identified that reduce the change of efficiency losses in a general equilibrium setting when distortions exist. The trade-off between efficiency and equity in such a setting is found to depend on country-specific parameters and to be reduced if: (1) a cost-effective policy is implemented, (2) environmental assets can be distributed prior to privatization, and (3) government expenditures can decline.