Nonmarket economic valuation and ‘The Economist’s Fallacy’

Murray Alan Rudd

Nonmarket economic valuation and ‘The Economist’s Fallacy’

Environment and Geography

Research output: Contribution to journal › Article › peer-review

Abstract

It is important that noneconomists understand and consider three key points regarding the use of economic cost-benefit analysis. First, economists undertaking applied cost-benefit analyses use expected values by necessity in forward-looking models. Second, economists tally changes in economic value, comparing “with” and “without” investment scenarios, using producer and consumer surplus. Third, marginal changes in the “nonmarket” components of consumer surplus can, and should, be quantified in monetary terms and included in evaluations whenever possible. These three factors highlight the need for multidisciplinary research on complex problems relating public investments to the social, cultural, health, and environmental impacts of those investments.

Original language	English
Pages (from-to)	93-96
Journal	Journal of Multidisciplinary Evaluation
Volume	5
Issue number	11
Publication status	Published - 2009

Access to Document

http://survey.ate.wmich.edu/jmde/index.php/jmde_1/issue/view/27

Cite this

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title = "Nonmarket economic valuation and {\textquoteleft}The Economist{\textquoteright}s Fallacy{\textquoteright}",

abstract = "It is important that noneconomists understand and consider three key points regarding the use of economic cost-benefit analysis. First, economists undertaking applied cost-benefit analyses use expected values by necessity in forward-looking models. Second, economists tally changes in economic value, comparing “with” and “without” investment scenarios, using producer and consumer surplus. Third, marginal changes in the “nonmarket” components of consumer surplus can, and should, be quantified in monetary terms and included in evaluations whenever possible. These three factors highlight the need for multidisciplinary research on complex problems relating public investments to the social, cultural, health, and environmental impacts of those investments.",

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AB - It is important that noneconomists understand and consider three key points regarding the use of economic cost-benefit analysis. First, economists undertaking applied cost-benefit analyses use expected values by necessity in forward-looking models. Second, economists tally changes in economic value, comparing “with” and “without” investment scenarios, using producer and consumer surplus. Third, marginal changes in the “nonmarket” components of consumer surplus can, and should, be quantified in monetary terms and included in evaluations whenever possible. These three factors highlight the need for multidisciplinary research on complex problems relating public investments to the social, cultural, health, and environmental impacts of those investments.

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