Introduction

This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book argues that benefit-cost analysis is much like a consumer information system. It aims to distinguish between questions involving political matters, for which the analyst must obtain answers from the political system, and questions that involve technical matters to be solved within the discipline of economics. The book analyzes some of the more commonly expressed justifications for public investment and/or regulation, which frequently are based on particular characteristics of the project or service in question. It provides a convenient context for a discussion of the contemporary practice of program budgeting. The book shows the major threats to causal validity and presents the reader with alternative quasiexperimental designs. Government must be able to achieve any distribution of income and welfare it desires by using costless lump-sum taxation.