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.