Uppgifter om studieperioden

Open to all students of the University of Helsinki. This is a master level course.

Spring term, fourth period.

After the successful completion of the course, students will:

1.Understand the most important concepts of microeconomic theory behind CBA, including compensating variation, equivalent variation, Potential Pareto Improvements, Consumer surplus, Producer surplus and Government surplus.

2. Understand how to value the impacts and the value of outcomes of projects affecting market prices, and learn the basic principles of benefit-transfer. (Please note that the methods for assessing the value of the quantity changes of non-market goods, such contingent valuation or travel cost method, can be learn in AGERE-003 Economic valuation methods.)

3.Estimate the demand function from cross-sectional data and use it to calculate changes in consumer surplus.

4. Be able to distinguish between impacts in the primary markets and the secondary markets and understand when the impacts in the secondary markets should be included in the CBA.

5. Learn the basics of how to include health effects into CBA.

6. Understand the impact of the choice of the discount rate on the net present value of a project, illustrate and critically assess the different theories regarding the choice of the discount rate, and calculate the net present value of a project.

7. Understand how uncertainty is incorporated into cost-benefit analysis in both theory and practice and perform expected value analysis and Monte-Carlo sensitivity analysis.

8. Understand how distributional issues can be incorporated into cost-benefit analysis and perform a simple distributionally weighted cost-benefit analysis.

9. Understand, illustrate and critically appraise the philosophical and ethical underpinnings of CBA.

10. Critically assess CBA-studies and distinguish a well-conducted CBA from a poor one.

Online course. The  course page (see mooc.helsinki.fi) will open Monday March 15th 2021. The course is self-paced but exam dates are fixed for all. There will be a final exam and two retakes. 

Microeconomics provides the primary foundation for cost-benefit analysis. Preferably students enrolling in this course should have a knowledge of intermediate microeconomics (e.g. YET-203 Theory of the firm and YET-204 Consumer theory). (If you have a knowledge of microeconomics at the introductory level or relevant work experience, you can still enroll in the course. However, you should be prepared to spend extra time learning the underlying microeconomics principles and tools.)

A good complement to this course is the course AGERE-003 Valuation

• The microeconomics foundations of CBA
• Valuing changes in the primary markets
• Valuing changes in the secondary markets
• Benefit Transfer
• Valuing health effects
• Discounting
• The social discount rate
• Dealing with uncertainty
• Distributional aspects
• Climate change and CBA

1. Textbook The required textbook is: Boardman, A.E., D.H. Greenberg, A.R. Vining, and D.L. Weimer. 2018. Cost-Benefit Analysis: Concepts and Practice (Fifth Edition). Upper Saddle River, N.J.: Pearson. (Hereafter Boardman et al.). The third and second edition of the book can also be used. Buying the book is strongly recommended. The book is very useful during the course and a good reference to have for future use.
2. Other required reading materials will include peer-reviewed articles and reports and will be available on the course webpage either directly or as a link to the University library resources.

The course is divided into different topics. As there is a progression from one topic to the other, please start from topic one and work your way to the end of the course. For each topic, you will find lecture videos and other learning materials. For some topics there will be also online tests that will help you to evaluate your understanding of the topic and to prepare for the final exam. These tests are formative only, meaning that they will not contribute to your final grade.

The final exam will be an online exam including questions similar to those you encountered in the online formative tests.  The grade for the exam will be 1-5 (1 = pass, 5 = excellent). 

Replaces the course 863010 Cost-Benefit Analysis 5 cr.

Anna-Kaisa Kosenius

Suitable for exchange students