CALIFORNIA STATE UNIVERSITY, SACRAMENTO
DEPARTMENT OF ECONOMICS
ECON 110 – Cost-Benefit Analysis
Spring 2016
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Instructor Information
Instructor: J. T. Kelly
Office: Benicia Hall 1011
Office Hours: MW 2:15 – 2:45 p.m. and by appointment
Office Telephone: 278-3576 (during office hours only)
E-mail: t.kelly@csus.edu
TA Tutoring TBA Econ Dept. Tutor Room
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General Information
Lectures: Alpine Hall Room 138
Schedule: Section 01 – MW Noon – 1:15 pm
Course Description
The course covers the everyday mechanics of cost-benefit analysis (often
shortened to CBA), from the conceptual framework and basic analytical
approach of cost-benefit analyses to common measurement issues, problems
and errors in current cost-benefit analyses. Students will be given the
opportunity to solve quantitative and qualitative problems; to explain
essential economics concepts of efficiency and apply them to current issues;
to learn how to compare costs across time periods; to identify biases or
problems in the cost-benefit analyses of others; to understand the use and
limits of surveys as a means of estimation; to see cost-benefit analysis as a
way of thinking rather than as a path to a predetermined outcome; and using
the CBA tools learned in class to write and present a cost-benefit project
(Contingent Valuation). You will also learn how to use the textbook as a
guide and reference for CBA. Prerequisite: Econ 1B.
Textbook & Course Materials
Required Text – Cost-Benefit Analysis: Concepts and Practice 4e,
Boardman, Greenberg, et al., Prentice Hall, 2011. Available at Hornet
Bookstore, Pearson Publishing, Amazon, etc., paper or electronic.
Required Research Project Training: Students must take a free 3-hour
online NIH training course for the protection of human research and pass
with a score of 80% or better: https://phrp.nihtraining.com/users/login.php.
Students create a profile and password so they can complete the course at
their own pace. A certificate of completion must be printed at the completion
of the training course and included in the Contingent Valuation project.
California State University, Sacramento
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Cost-Benefit Analysis
Spring 2014 Syllabus
Reading Assignments: Chapters as indicated on Course Outline, plus other
sources as assigned. The instructor will indicate when certain text passages
are to be skipped. The schedule will be reassessed continuously and adjusted
to better meet student understanding and topic coverage.
Homework: End-of-chapter problems may be assigned. Special projects will
be assigned periodically, often due at the beginning of the next class
meeting. Some special homework projects may be assigned to CV groups. An
absence is not an excuse for missing an assignment.
Cost-Benefit Analysis: You will prepare a true Contingent Valuation
project (not the same as a term paper) on a current issue that I will
announce in class. It will require familiarity with EXCEL! Your grade will be
influenced by the quality of the report, its analysis, and presentation of the
results in class. Revealing confidential data will result in failing the CV
project!
Graded Course Activities
Homework Assignments, pop quizzes 10%
2 Mid-term exams 20% each
Final Exam 20%
CBA CV Paper 30%
Extra Credit up to 3 points on final grade for superior class participation
Letter Grade Assignment
Letter Grade
A
AB+
B
BC+
C
CD+
D
F
Percentage
91.5-100%
89.5-91.4%
88.5-89.4%
81-88.4%
79.5-80.4%
78.5-79.4%
70.5-78.4%
69.5-70.4%
68.5-69.4%
59.5-68.4%
0-59.4%
Performance
Excellent Work
Nearly Excellent Work
Very Good Work
Good Work
Mostly Good Work
Above Average Work
Average Work
Mostly Average Work
Below Average Work
Poor Work
Failing Work
Course Structure
In the Classroom —
The nature of the course will be face-to-face lecture, augmented with
whiteboard explanations and occasional PowerPoint slides. It may be helpful
to bring the text to class, as I typically refer to it. Class time will be allocated
to team meetings, discussion and project presentations as needed.
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Announcements —
Announcements will be made during lectures, but sometimes also sent by
email using SacCT. Be sure your email on file with the University is correct,
my e-mail is not SPAM and that your inbox is not full.
Responsibilities —
I will come to class well prepared; respond to and encourage questions and
other appropriate class participation; grade your quizzes, exams, term
papers and any other assignments fairly and in as timely a fashion as
possible; be available during office hours and for scheduled appointments; let
you know as soon as any changes are made to the schedule, course or class
meetings; and do my best to stimulate your appreciation, interest and
enthusiasm for economics.
I expect you to read the syllabus thoroughly and understand the ground
rules; attend and actively participate in lectures; complete all the assigned
readings in a timely manner; complete all assignments on time; ask
questions when you are lost or confused; ask questions even if you fear they
might be “dumb” or that you’re the only one who doesn’t get a point (believe
me, you are not alone); seriously think about the material and study for and
complete all homework, quizzes, midterms and a comprehensive final
examination. I also expect that you will refrain from asking me to make
special exceptions to the requirements laid out in this syllabus just for you.
Caveat Emptor – Economics is a discipline that is built up cumulatively,
brick by brick, so is not a subject that you should let slide until the last
minute, fall behind on readings or fail to ask questions as soon as you realize
you don’t understand something. Ask classmates, an economics student
assistant or me. Forming study groups is also a good way to learn the
material. Many students have found that using their term paper group as
their study group is very helpful, but you can always do both. Even if you are
the best student in a group, you will still learn through your efforts to explain
the material to others. If at any point during the semester you are having
difficulty, PLEASE come see me sooner rather than later. If you do keep up
with the material, most of you can do well in the course.
Key Estimated Exam Dates
Wednesday March 9
Wednesday April 20
Monday April 25
Wednesday May 18
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First Mid-term exam
Second Mid-term exam
CBA Projects due
Final Exam
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Topics, Readings, and Estimated Schedule
Week
(Est.)
Course Outline
Why Government?
Topics: Opportunity cost, efficiency and markets, market failure, consumer
and producer surplus, standing
Week 1/2:
Week 2/3:
Week 4:
Week 4/5:
Week 5/6:
Week 6/7:
Week 7/8
Text Chapter 15: Contingent Valuation: Using Surveys
You say you’ll do it, but will you really?
Introduction and review of the “basic model”
Text Chapter 1: Introduction to Cost-Benefit Analysis
Efficiency and CBA
Text Chapter 2: Conceptual Foundations of CBA
Which is better? Use producer/consumer surplus to see
Text Chapter 3: Microeconomic Foundations
Appendix 3A
Valuing Cs & Bs in Primary and Secondary Markets
Willingness to pay
Market Failures and social values
Text Chapters 4 & 5
Review and Midterm Exam #1
Return/Discuss Exam #1
Cost-Effectiveness Analysis
Text Chapter 18
Technical Components (Guts) of Classical CBA
Topics: Net Present Value, discount rate, price and value, real and nominal
values, economic “justice”, multi-project questions, sensitivity analyses,
uncertainty
Week 9:
Week 10:
Spring Recess! March 21-27
What’s it worth today? tomorrow?
Text Chapter 6: Discounting Bs & Cs
Uncertainty ruins CBA, right? Wrong!
Text Chapter 7: Dealing with Uncertainty
Week 11/12:Can mere existence of an unused thing cause value?
Text Chapter 9: Existence Value
Social values now and again
Text Chapter 10: Social Discount Rates
Week 12/13: Review and Midterm Exam #2
Week 14: CV Project Papers Due (including PPTs)
Week 14: Return/Discuss Exam #2
Week 15/16: Present/discuss papers
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If there is time:
Measurement Issues and Non-Market Problems
Topics: Value of life, shadow prices, contingent valuation, surveys
Prediction is very difficult, especially about the future
Text Chapter 11: Predicting and Monetizing Impacts
Indirect measurement methods
Text Chapter 14: Valuing Impacts from Observation
How much is a life worth? Yours? WWALS?
Text Chapter 16: Shadow Prices
CBA accuracy and relying on the kindness of strangers
Text Chapter 20: How Accurate is CBA?
CBA Project presentations
Review
CBA Project presentations
Review
Week 17: FINAL EXAM WEEK
Wednesday, May 18
Final Exam 10:15 – 12:15 pm in Alpine 138
Assignments, Exams and Weekly Readings
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Homework will be completed on time. “The dog ate my computer”, “I
eloped that weekend”, “My (fill in relationship – dog, friend, dealer, car
etc.) (fill in catastrophe – left me, didn’t leave me, borrowed my
computer, broke down, etc.) ”, or other problems are no excuse for
missing assignments or exams .
I will sometimes take some class time to examine and discuss articles
appearing in the Sacramento Bee, often the Sunday Business section.
This course is crammed with readings, homework and a cost benefit
analysis term paper, so the only Extra Credit available to you is class
participation. Extra credit for above-average class participation is very
difficult to achieve if you are not in class.
I often take roll, typically at or near the beginning of the lecture, so
punctuality matters, but I also sometimes take roll later.
No late homework. Due dates for all homework assignments will be
clearly conveyed in class in advance. It is not possible to extend time for
assignments after the due date. If you add the course late in the
semester, you cannot makeup work you have missed.
Give yourself ample time to complete assignments. These assignments
are challenging and important both for your homework grade and your
performance in the class. I encourage you to spend time working
through them carefully and to seek out help from a classmate, an
economics tutor, or me when you encounter problems.
Please ask me questions if you do not understand a part of the lecture
or the readings. And please ask your questions either in class or during
office hours. I believe that it is particularly important that you ask your
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questions during the class so that other students will be able to learn
from them, too. You may fear that you are the only one lost and that
your questions will betray ignorance, but nothing could be farther from
the truth: many, if not most, students will have the same questions but
hope that they will figure it out somehow on their own. Also, the
moment may pass and you’ll forget the question or the material itself.
Thus it is important not to give in to the temptation to hold the question
until class is just over, when everyone else and I will be departing for
the next class and the next class and professor will be coming in.
Pop quizzes will be given approximately three times per month. They
typically contain T/F, M/C, and/or one short discussion question
concerning either recent lectures to show how you are “getting” the
covered material, or an assignment made for that day.
Mid-term exams are closed book and given in class. All Mid-term exams
are comprised of written response, true/false, true/false/explain,
multiple-choice and or discussion questions, requiring a large Blue Book
and Scantron 882-E form. Please use a pen for the written questions
and a No. 2 pencil for the T/F-MC questions.
The Final Exam may be similar to the Mid-term exam style, may include
analysis of a CBA study or may be a take-home exam. I will provide
more information as the semester progresses and the final exam nears.
All exam dates are scheduled and fixed. As there are no make-ups,
these dates are set in concrete so that you can arrange to be here.
If your grades are sufficiently high, such as “A-”s, “A”s and “A+”s, you
may be able to exempt the final exam.
Free peer tutoring for reviewing basic economics concepts used in this
class is available in the Department of Economics. Tutoring hours are
posted in the Department office during the first week of classes and at
http://www.csus.edu/dev/managed/College-ofSSIS/econ/undergraduate%20program/tutoring.htm.
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Policies
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As a student in this course (and at this university) you are expected to
maintain high degrees of professionalism, commitment to active
learning and participation in this class and also integrity in your
behavior in and out of the classroom. Academic honesty is expected.
Students suspected of cheating will be reported to Judicial Affairs.
There will be no makeup quizzes or examinations. Exam dates are
given in the course outline. This is to avoid any potential conflicts.
Attendance is both expected and highly recommended. If you miss a
class, be sure to check with your fellow classmates, to see what
material you missed; I recommend finding at least one “study buddy”
or join a study group to facilitate information flow for exams or in case
of an absence. Come to class on time; you will not be given extra time
if you are late for a pop quiz or an exam.
If you decide to withdraw from this class, make sure you do so with
the registrar. If you withdraw without permission, you will be assigned
a failing grade. Once a student submits work for a grade, he/she will
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Spring 2014 Syllabus
not be assigned a grade of “WU” under any circumstances. Keep
mobile devices off during class, including laptops. If you wish to use
your laptop during class, please come speak with me. You may not use
your phone/MP3 player as a calculator on exams. You may use a
calculator without programming capabilities.
No phones, please!
We have a student assistant for this class, so be sure to avail
yourselves of his economics and CBA expertise.
Keep the all your exams and quizzes and problem sets until after
receiving your final grade, for future reference.
I will be available by phone during office hours, so if you have
questions and cannot get to my office then, please phone them in.
remember, though, I already may have students in the office.
A person with a documented illness for missing one midterm exam will
have the weight of his/her midterm added to their final exam, so that
their final exam will be 40% of the grade. Failure to provide the
required documentation within one week from the date of the exam
will result to a grade of zero for the exam.
If you have a learning disability or a physical disability that requires
accommodation, please let me know as soon as possible. It is the
student’s responsibility to provide documentation to the Office of
Services to Students with Disabilities (SSWD) and meet with a SSWD
counselor to request special accommodation before classes start.
SSWD is located in Lassen Hall 1008 and can be contacted at (916)
278-6955 (Voice), (916) 278-7239 (TDD only) or sswd@csus.edu.
All needs that have been verified through the Services to Students
with Disabilities (Lassen Hall) will be accommodated.
Life Lessons
If you find that you have any trouble keeping up with assignments or
other aspects of the course, make sure you let me know as early as
possible. As you will find in life, building rapport and effective
relationships are keys to becoming an effective professional. Make sure
that you are proactive in informing your instructors when difficulties
arise during the semester so that they can help you find a solution.
Understand When You May Drop This Course
It is the student’s responsibility to understand when they need to
consider dis-enrolling from a course. Refer to the Sac State Course
Schedule for dates and deadlines for registration. After this period, a
serious and compelling reason is required to drop from the course.
Serious and compelling reasons includes: (1) documented and
significant change in work hours, leaving student unable to attend
class, or (2) documented and severe physical/mental illness/injury to
the student or student’s family.
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California State University, Sacramento
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