Trinity College

Should the government undertake a particular project? How do we value changes introduced by a project or program? What should be counted as a cost? A benefit? Whose value matters? What is fair? How do we compare benefits that accrue in the future to those that happen today? How do we compare benefits that accrue to part of society with the costs that accrue to another part? These are a just a few of the questions that arise when governments allocate funds. Benefit cost analysis is one tool that the government uses to analyze investment decisions. The purpose of this course is to examine the process of benefit cost analysis with a critical eye.

We will begin by examining the welfare economics at the foundation of benefit cost analysis and the controversies that have arisen from its application. Once we have developed an understanding of the theory behind the technique, we will critique several published benefit cost studies and produce one of our own. This is a Community Learning (CL) course. We will be working with College to perform cost benefit analysis on several projects of importance to the College’s financial plan.

Although this course will build concepts examined in Public Finance (Econ 306), it is not assumed that everyone has taken that course.

Required Texts: The following texts are available at the bookstore:

Brent, Robert J. 1996. Applied Cost-Benefit Analysis, Edward Edgar.

Adler, Michael & Eric A. Posner. 2001. Cost-Benefit Analysis: Legal, Economic & Philosophical Perspectives. University of Chicago Press.[1]

Other readings will be available on Blackboard or in a packet from Erika for $27.

Recommended Texts: The following texts are recommended for students serious about developing this skill:

Friedman, Lee S. 2002. The Microeconomics of Public Policy Analysis, Princeton University Press.

Fuguitt, Diana & S J Wilcox. 1999. Cost-Benefit Analysis for Public Sector Decision Makers. Quorum Books.

Gramlich, Edward M. 1990. A Guide to Benefit-Cost Analysis, Second Edition. Waveland Press, Inc.
Grading

Class Attendance and Discussion: 35%

Attendance and participation in class discussion are essential for the success of a seminar course. Students must come to class prepared, having read the material and outlined the key conclusions, arguments and evidence presented in each reading. There will be no excused absences. Each missed class will lower your grade.

Seminar Leadership 15%

Each student will lead the group through at least one discussion (not a lecture) of the course material. In addition, each student will choose and lead a discussion of a benefit cost analysis. Students, working in pairs, must identify a benefit cost analysis for inclusion in a Xerox packet (or placement on blackboard) before October 31. We will use these studies as the basis of our discussions during the last weeks of class.

Short Essays* 10%

At the end of each of the first two units, each student will prepare a short essay (3-5) pages explaining an aspect of the economic theory we have examined. The essay will be due the following class period. Students must choose a topic from a day they did not lead discussion.

Research Project* 40%

This term we will be working with the College to perform cost benefit analysis on several projects of importance to the College’s financial plan. Here are several projects from which you may choose. Students may work in groups of 4 to complete the project. Groups will pick from the following list:

Student Life:

1. Does the College really need all the RAs, Pride Leaders, and Mentors it currently employs?

Is the money spent on providing these resources well spent? How does Trinity compare to other colleges of its size? What are the likely effects of reducing the RA/Student ratio? Will custodial staff have to increase work? Will there be more infractions?

2. What is the best policy for facility access?

Determine the optimal scheduling for the Library, Mather, Bistro, & Cave facilities. Should these facilities be open more hours?

3. Urban engagements: What is the best transportation policy for the College to adopt?

Two suggestions are a College-run shuttle service and provision of free bus passes to all students. Which is the most cost-effective solution? Are there any other possibilities that should be considered?

Intellectual Life:

4. Are the changes in the Study Abroad Program net beneficial?

The College recently enacted several changes in the Study Abroad program: equalizing the number of students studying abroad each term, limiting the programs which can be selected, and requiring earlier declaration of intent. Are these changes cost-beneficial?

5. What is the best way to handle bringing speakers to campus?

Each year Trinity sponsors a multitude of speakers, many of which are poorly attended by students, faculty & staff. Some have How can we better arrange our funds to get more for our money?

6. What is the value of Community Learning courses?

What is the value-added of community learning courses (or community learning exercises within more traditional courses)? What are the costs/benefits to students?

· Each Benefit Cost analysis should be substantial (30+ pages) and follow the usual format.

· Results will be presented in a public forum at the end of the course. This presentation is tentatively scheduled for the last Monday of the term.

· For the purpose of this course, you are serving as an analyst not an advocate. You will be graded on the soundness of your economic application, not the answer it generates.

Group formation & topic selection September 19

Outline October 17

First Draft November 14

draft for distribution to the class November 28

presentations Last week of classes

Final draft incorporating class comments December 14

*These portions of the course are subject to a “Fatal Errors Policy” (see below).

Course Policies:

· A grade of incomplete will be given only in the case of a confirmed medical excuse & in accordance with College regulations.

· We will take a 10 minute break in the middle of the class period. Please refrain from taking your own independent break at other times!

· No late papers will be accepted. Any papers turned in after the specified time period will get an F.

· Students are expected to be familiar with the rules and regulations of The College in the Handbook. Any student who commits academic dishonesty by violating the prohibitions listed in the Handbook will have earned a failing grade for this course & may be subject to further sanctions as determined by the Academic Affairs Committee.

· Class discussion is essential for a successful seminar. There will be no excused absences. Each missed class will lower your grade.

· Cell phone interruptions will not be tolerated. If your cell phone rings during class you will be asked to leave & will be counted absent for the day.

· Fatal Error Policy: Papers with more than three fatal errors marked by the instructor on any page or more than 10 (30 for your research project) for the entire document will be returned to the student ungraded. The paper may be resubmitted for grading no later than the next class period. Resubmitted papers will be penalized one full letter grade. Papers that are returned twice for excessive fatal errors cannot receive a grade higher than an F. Fatal errors include:

o Each different word misspelled;

o Sentence fragments;

o Run-on sentences and comma splices;

o Mistakes in capitalization;

o Serious errors in punctuation that would inhibit understanding;

o Errors in verb tense or subject and verb agreement;

o Lack of conformity with assignment format;

o Other serious grammatical errors; and

o Improper citation.

Rationale: This policy is instituted in the belief that as graduates of Trinity College you must be able to communicate effectively. The fatal error policy is part of the process of developing appropriate written communications skills. As seniors, you should have mastered the mechanics of writing. This policy allows us to focus on content, presentation and building an argument rather than careless writing errors. Please note that the Writing Center is available for help and you are encouraged to form writing groups to proof read each other’s papers.

[1] All these articles were first published in the Journal of Legal Studies 29(2) available on Jstor for those who prefer to read online rather than purchase the book.