1. COST-BENEFIT ANALYSIS
Overview of Case Studies
These notes are only meant to provide a quick overview over the key points of the case studies we studied in
class. For the exam you should also look again at the class slides, your notes and the original documents.
1. Chicago Summer Olympics.
2. Iraq War
3. London congestion charge
4. Chicago Child-Parent Centers Early Education
5. Three Gorges Dam, China
6. Domestic oil drilling
7. The Clean Air Act
8. Homeland Security
9. Chickenpox Vaccination
10. Smoking in the Czech Republic
11. Second Avenue Subway
For the exam, ignore studies 5 and 11 (3 Gorges Dam and NYC Second Avenue Subway)

2. 1. EVENTS - OLYMPICS
Watkins SD, Anderson PL. The Likely Economic Impact of a Chicago 2016 Summer Olympics. AEG Working
Study
Paper 2009-9
What is the
purpose of the
Study whether hosting the Olympics in Chicago min 2016 would make economic sense
cost benefit
analysis?
What are the
Hosting the Olympics versus not hosting them
policy options?
What is the
perspective?
Both: City of Chicago
Who has
standing?
What are the
main costs? Construction of stadia and venues, advertising, catering
How are they Based on budget estimates
calculated?
What are the
main Revenues from visitors, athletes and journalists (spending on hotel, meals)
impacts/benefits Tickets sales, sponsorships, advertising
considered in
the study? Projected number of visitor days x average spending per day
How are they
measured and + Multiplier effect (An increase in spending produces an increase in income and consumption greater
what than the initial amount spent)
methodology is
used to value Calculations account for substitution effect (tourists spending money in Chicago even without Olympics)
them?
What discount
No discounting
rate is used?
Problem of Exaggerated “Economic Impact” Claims:
a) Substitution Effect:
Additional expenditure replaces another expenditure, not truly additional, e.g., just a shifting of economic
activity, e.g. instead of family going to dinner and a movie they buy tickets to an Olympic event
Underestimation of SE- True economic impact: only net benefits, i.e., dollars that would have been spent
somewhere else or not at all.
b) Multipliers:
Other
Tendency to use multipliers that overstate indirect impact of an event
Only dollars that are spent in the local economy count.
Chain stores and restaurants – large % of profits might go to HQ elsewhere
Also, “Crowding Out” Effect:
Visitors who might have visited Chicago as part of a regularly planned vacation may visit another
destination to avoid Olympic crowds and prices
Residents might leave temporarily for the same reason
Additional Info Class slides – Class 3 – September 19

3. 2. IRAQ WAR
Stiglitz J and L Bilmes. 2008. The Three Trillion Dollar War; The True Cost of the Iraq Conflict. WW Norton &
Study
Co.: New York, NY. Working paper version: http://works.bepress.com/joseph_stiglitz/10/
What is the ▫ Give an idea of the true cost of the war compared to estimates prior to the war ($1 trillion+ versus prior
purpose of the estimate of $50-60 billion)
cost benefit ▫ Show main budgetary costs and main economic costs
analysis? ▫ Show distribution of cost over time - what are we paying for now versus what we will pay for later?
What are the
War versus no war
policy options?
What is the
perspective? Financial and economic/social costs – US only
Who has Iraqis have no standing
standing?
Financial Costs
1. Military operations – Department of Defense Expenditures
2. Future operations - Costs estimated to be proportional to the number of troops scheduled to be
deployed in Iraq from 2006-2010
3. US fatalities – Death benefits paid to families of deceased soldiers
4. Veterans care – VA expenditures per case projected into the future
5. Replenishment of military to original strength
What are the 6. Interest payments to support deficit financing of war – 2 scenarios – paid back within 5 years, not paid
main costs?
back – 4% interest rate
How are they
calculated? + Economic Adjustments to above (mainly to account for costs borne by other than federal government,
also for market distortions)
+ Macroeconomic Costs
1. Increase in Price of Oil ($25 a barrel before war to $50 in 2005, 20% of that
price increase assumed due to Iraq war)
2. Increase in Defense expenditures
3. Increase in Insecurity
What are the
main
impacts/benefits Ex Ante benefits mostly not realized, not valued in the paper
considered in • Supplies of oil, lower price of oil
the study?
• Stability in the Middle East
• Gratitude of Iraqis
How are they
measured and • Reduction in future terrorist attacks
what • Testing of military equipment (future sales)
methodology is
used to value
them?
What discount
4% , nominal , seems low, undervaluation of cost of capital
rate is used?
Not considered:
• All costs borne by other countries
Did the study • Military costs
consider all • Destruction of property
possible costs
• Loss of life
and benefits or
• All costs of increased security
is there
something that • Increased costs of cross border flows
could be • Reduced investment
added? • Consequences of loss of credibility
• Value of reduced capability of responding to national security threats elsewhere in the world
Additional Info Class Slides – Class 8 – November 7

4. 3. TRANSPORTATION – CONGESTION CHARGE
Study Leape J. 2006. The London congestion charge. Journal of Economic Perspectives, 20, 157-176
What is the
purpose of the
Compares costs and benefits of the London Congestion charge introduced in London in 2003
cost benefit
analysis?
What are the
Charge vs. no charge
policy options?
What is the
perspective?
Who has
City of London, all commuters
standing?
• Administrative costs
What are the • Cost of operating the scheme (turned out much higher than expected)
main costs?
• Setup costs
How are they • Traffic management costs (mainly increased bus service)
calculated?
Based on expenditure records
What are the Time savings and reliability benefits
main Reduced accidents (fewer cars)
impacts/benefits Reduced CO2 emissions
considered in
the study?
Impacts measured:
• Changes in traffic entering Central London
How are they
measured and • Number of trips
what • Number of vehicle miles driven
methodology is • Number of people switching to buses
used to value • Impact on average speed
them?
Valuation: Time saved per trip valued at wage rate, fuel cost saved at lower congestion rate
What discount
--
rate is used?
Other Good example of charge/tax imposed to reduce an externality (congestion)
Additional Info Class Slides – Class 7 - October 31

5. 4. EARLY EDUCATION
Reynolds AJ, Temple JA, Robertson DL, and EA Mann. 2011. Age 26 cost-benefit analysis of the Title I
Study Chicago Child-Parent Centers. Child Development, January/February 2011, Volume 82, Number 1, Pages
379–404
Tries to answer the following three main questions:
▫ Does participation in the CPC program continue to demonstrate high economic benefits relative to
What is the
costs?
purpose of the
▫ Do the estimated economic benefits differ across the three components of the program (preschool,
cost benefit
analysis? school-age, and extended-program participation)?
▫ Do economic benefits differ by child and family subgroups, including gender, parent education, family
risk status, neighborhood poverty, and length of participation?
• Children attending the CPC program
What are the
• Children attending the usual early childhood programs in preschool or kindergarten in the
policy options?
neighborhood
Standing: both participants and society in general
• Benefits to participants are for the child and parent attending the program (increased earnings
capacity over the life course and the value to parents for the provision of part-day preschool)
What is the
• Benefits to the general public (averted expenditures for remedial education and child welfare
perspective?
spending by governments, reduced tangible and intangible expenditures to crime victims, reduced
Who has
standing? expenditures for mental health and substance abuse treatment, and increased tax revenues to
governments associated with increased earnings)
• Benefits to society: sum of benefits to program participants and the general public, including
government savings.
What are the • All outlays for staff, family and community support, administration, operations and maintenance,
main costs? instructional materials, transportation and community services, school-wide services, school district
support, capital depreciation and interest,
How are they • Estimates derived from operational budgets of the Chicago Public Schools
calculated?
Impacts during early years of interventions difficult to quantify and monetize
e.g. impacts at younger ages – social adjustment, increased ability to handle frustration, less acting out…
Grades K through 12: Cost savings due to reduced rates of retention, lower need for special education
classes, lower involvement in youth criminality
What are the Findings at ages 19+: Significantly higher rates of high school completion, and completion of more years
main of education - resulting in an increase in lifetime earnings, government tax revenue, lower crime rates
impacts/benefits and costs, lower rate of substance abuse and smoking.
considered in
the study?
Lifetime earnings and tax revenues projected based on years of education (high school dropouts vs. high
How are they
school graduates vs. college graduates)
measured and
what
methodology is Overall study design: Non-randomized, quasi control group (no randomization because of ethical
used to value concerns - proven effectiveness of intervention and intention to target participants most in need)
them?
What discount
3%, all benefits discounted to age 3 (=year 0) of the program
rate is used?
Extremely well funded and well-designed program, not all early education programs might show the same
Other
level of impact.
Additional Info Class Slides – Class 9 – November 14

6. 5. INFRASTRUCTURE - DAMS
Morimoto R and C Hope. 2004. Applying a cost-benefit analysis model to the Three Gorges project in
Study
China. Impact Assessment and Project Appraisal, 22, 205-220
What is the
purpose of the
CBA of Three Gorges Dam project
cost benefit
analysis?
What are the
Dam versus status quo
policy options?
What is the
perspective?
Chinese government
Who has
standing?
Construction costs
What are the Operation and maintenance
main costs?
How are they Valued based on original budget + high and low scenario
calculated?
In addition – costs of negative impacts (see there)
Positive Impacts
• Power generation (+switch to clean power)
• Economic growth
What are the
• Flood control
main
impacts/benefits • Navigation improvement
considered in
the study? Negative Impacts
• Displacement of huge numbers of people (most recent estimate 6 million)
How are they • Submersion of vast areas of fertile farmland;
measured and • Vulnerability to sabotage and earthquake
what • Likely deterioration of water quality, affecting fisheries and others
methodology is
• Loss of a great tourist attraction and antiquities
used to value
them? • Sedimentation likely to reduce power generation
Valuation based on estimated quantities x unit costs (for details see slides). Minimum, most likely and max
scenarios and Monte Carlo analysis for all variables.
What discount
5%
rate is used?
Other Most of the negative impacts seems undervalued
Additional Info NOT COVERED THIS SEMESTER

7. 6. OIL DRILLING
Study Hahn R and P Passell. 2008. The economics of allowing more domestic oil drilling. AEI paper 08-21
What is the CBA of allowing drilling in two areas in the US so far not open for oil drilling - Alaska’s Arctic National Wildlife
purpose of the
Refuge (ANWR) and the Outer Continental Shelf (OCS)
cost benefit
analysis? 1) Estimation of impact on US gasoline prices
2) Cost-benefit analysis
What are the
Drilling in ANWRA, OCS or both, compared to status quo (no drilling)
policy options?
What is the
perspective? US/Societal perspective
Who has Standing: US oil producers and consumers
standing?
• Producers’ oil extraction and marketing costs
• Loss of “Use value” - cost of not being able to use resources for other purposes such as hunting, bird
watching
What are the • Loss of “Non-use value” – from perceived uniqueness of the resource
main costs?
How are they Production costs based on historical cost per barrel
calculated? Use value – gains from land use, employment, losses from negative impacts on air and water quality,
resulting losses in tourism and degradation of animal habitats
For non-use value use of the contingent valuation data from the Exxon Valdez oil spill for ANWR, assumed
to be $0 for OCS
What are the • Revenues going to producers
main • Domestic benefits to consumers associated with lower world oil prices
impacts/benefits • Reduced economic costs of disruption associated with adjusting to rapid price fluctuations
considered in • Reduced expenditures on oil imports leading to reduced terrorist activities /destabilizing military
the study? expenditures in the Middle East (not valued in the study)
How are they
measured and Valuation:
what Revenues ($100 a barrel x barrels sold)
methodology is Assumption that domestic production will reduce prices to consumers by 10%, reduction in disruption by
used to value 5%.
them?
What discount
One year snapshot, no discounting
rate is used?
Study biased toward showing benefit of drilling (study by conservative think tank – American Enterprise
Institute)
• Use of production cost and revenue estimates at opposite ends of spectrum (400% profit margin?)
• Consumer savings inconsistent with results of first part of study (which show that drilling would have
Other essentially no impact on gasoline prices)
• Complete undervaluation of social cost
• Use of WTP (Exxon Valdez) for the non-use value…should use WTA which is much higher
• No accounting for pollution/CO2 emission
• Doesn’t include any value for predicted oil spill
Additional Info Class Slides – Class 10 – November 19

8. 7. ENVIRONMENT – CLEAN AIR ACT
The Benefits and Costs of the Clean Air Act, 1970 to 1990. Executive Summary
Study The Benefits and Costs of the Clean Air Act, 1970 to 1990. Appendix I. The Valuation of Health and
Welfare Effects.
What is the
How do the overall health, welfare, ecological, and economic benefits of Clean Air Act programs
purpose of the
compare to the costs of these programs?
cost benefit
analysis? Periodic CBAs of the Clean Air Act mandated by the 1990 CAA Amendment
What are the Implementation of Clean Air Act versus status quo (assumption that no air pollution controls were
policy options? established beyond those in place prior to enactment of the 1970 Amendments).
What is the
perspective?
US society
Who has
standing?
Direct Cost:
• Cost of installing, operating, and maintaining pollution abatement equipment (mainly scrubbers in
smoke stacks and catalytic converters in cars).
What are the • In addition, design and implementation of regulations, monitoring compliance, and investments in
main costs? research and development
How are they Presented as annual costs: Amortized capital costs plus operating and maintenance costs
calculated?
+ Indirect Cost:
Increased production costs > higher consumer prices > lower demand > reduced output and employment
Electricity generation (prices + 2-4%, demand -3-5%), other goods (vehicles, etc.) about 1% reduction in
output
Observed reduction in harmful emissions (SO2, NOX, CO) leading to improved air quality leading to
improved health and mortality outcomes
Specific health outcomes: Reduction in incidence of asthma, bronchitis, hypertension, heart disease,
What are the elevated blood lead levels leading to reductions in IQ,
main
impacts/benefits To get from Air Quality to Health Effects:
considered in 1. Development of “Concentration-response functions” to relate outdoor concentrations of harmful
the study?
substances to changes in the incidence of health effects and mortality
2. Estimation of the exposure of individuals to those air pollutants
How are they
measured and 3. Valuation of avoided human health risk by application of estimates from the literature - unit values
what per case avoided
methodology is
used to value Valuation: Either existing WTP or WTA estimates or Cost-of-Illlness (COI) estimates
them? COI: present value (PV) costs of treating the illness over the years, as well as the PV of the stream of lost
earnings related to the illness
Usually COI values < WTP < WTA values since they exclude pain and suffering
Lead levels: Negative effect on education level and income
What discount
5%, with sensitivity analysis at 3% and 7%
rate is used?
Other
Additional Info Class Slides – Class 10 – November 19

9. 8. HOMELAND SECURITY
Mueller J and MG Stewart. 2011. Balancing the Risks, Benefits, and Costs of Homeland Security.
Study
Homeland Security Affairs, Vol. 7, Article 16 (August 2011).
What is the
purpose of the Comparison of the cost of security measures with the benefits as tallied in lives saved and damages
cost benefit averted
analysis?
What are the
‘Enhanced” security measures or doing nothing
policy options?
What is the
perspective?
US
Who has
standing?
What are the
main costs?
Documented Increased annual expenditures on homeland security (on average +$75 billion a year)
How are they
calculated?
What are the
main impacts/
benefits Lives saved and damages averted
considered in Cost based on past terrorist attacks (eg., 9/11, London subway, failed Times Square bombing)
the study?
What discount
Comparison of 1-year expenditures to 1-year benefits, no discounting
rate is used?
Annual cost spent on enhanced security measure
Cost per Life Saved = ------------------------------------------------------------------------------------------------------------------------
Fatalities averted by enhanced security measure OR
Fatalities before enhanced security measure x % risk reduction due to enhanced SM
Several definitions of cost-effectiveness:
1. “A security measure is cost-effective if the benefit of the measure outweighs the cost of providing the
security measures” = B>C = Net Benefit >0
According to that criterion:
Enhanced expenditures seem excessive
“To be deemed cost-effective the security measures would have to deter, prevent, foil or protect each
year against 1,667 otherwise successful attacks that inflicted some $100 million in damage (more than 4 a
day) or 167 attacks inflicting $1 billion in damage (nearly one every other day) “
Other
Generally accepted criterion for cost-effectiveness of security measures:
2. “Cost per life saved not exceeding $1–$10 million is typical as this provides a reasonably accurate
reflection of societal considerations of risk acceptability and willingness to pay to save a life.
If the annual cost per life saved exceeds $1–$10 million, such risk reduction expenditure is deemed to
have failed a cost-benefit analysis and so is not cost-effective” (Viscusi)
Even based on that criterion many of the security measures put in place do not qualify (exception
hardened cockpit doors, passenger and crew sensitization)
Problems with current Dept of Homeland Security approach:
• Focus on worst case scenarios;
• Addition, rather than multiplication of, the probabilities;
• Assessment of relative, rather than absolute, risk; and
• Inflation of terrorist capacities and the importance of potential terrorist targets
Class Slides – Class 11 – November 28
Mueller J. 2008. The Quixotic Quest for Invulnerability: Assessing the Cost, Benefits, and Probabilities of
Additional Info
Protecting the Homeland. Prepared for presentation at the National Convention of the International
Studies Association San Francisco, California March 26-29, 2008

10. 9. HEALTH - VACCINATION
Zhou et al. 2008. An economic analysis of the universal varicella vaccination program in the United States.
Study
Journal of Infectious Diseases, 197: s156-164
What is the
purpose of the
CBA of recommendation to add a routine second dose of varicella vaccine
cost benefit
analysis?
What are the
Routine immunization consisting of 2 doses of the vaccine versus 1 dose only versus no vaccine
policy options?
What is the
perspective?
Who has
US Society
standing?
1. Direct costs (medical and non-medical)
What are the 2. Societal: Direct costs + indirect effects, such as productivity changes for patients and caregivers)
main costs?
How are they Cost of vaccination + treatment of side-effects
calculated? • Vaccine incl. wastage factor of 10%, administration (doctors time) + cost of treating side effects of
vaccine (1% of people vaccinated)
• Caregiver’s travel to clinic (bus ticket and lost wages)
Health care costs and income loss averted due to reduced incidence of disease
Direct costs;
What are the
Health care costs associated with children or adults contracting varicella:
main
impacts/benefits In- and outpatient care - physician costs, costs of drugs, supplies, lab tests, etc from insurance database
considered in Costs of institutional care for patients with long-term disability (costs $100,000 annually over 50 years)
the study?
Indirect costs:
How are they 1. Economic value of life lost prematurely and permanent disability (discounted cost of future work
measured and cost)
what 2. Work time lost by adults who contract disease
methodology is
3. Work time lost by parents who stay home because their children contract disease
used to value
them?
Based on a decision tree analysis assigning probabilities to the different events
1. Estimation of burden of varicella disease without vaccination
2. … with 1 dose vaccination
3. …with 2 doses of vaccination
What discount
3%
rate is used?
Indicators for Cost-effectiveness/Cost-Utility Analysis (CEA/CUA) used for health interventions:
1. QALYs (Quality-Adjusted Life Years) often used to measure impact of a health intervention ($ per
QALY saved)
One year of life lived in perfect health is worth 1 QALY (1 Year of Life × 1 Utility = 1 QALY)
A year of life lived in a state of less than this perfect health is worth less than one
2. DALYs (Disability-Adjusted Life-Years)
Similar to QALYs, used mainly by World Bank and WHO to compare the burden of disease in different
countries (number of healthy life years lost and number of years lived with disability) Cost results
presented as $ per DALY averted)
Other
Immunization study - Results presented in a variety of ways:
Cost-benefit – NPV, cost-benefit ratio
Cost-effectiveness – Cost per case prevented and per life-year saved,
Cost-utility - Cost per QALY saved
2-dose vaccination only beneficial when compared to no vaccine,
Costs not justified compared to 1-dose vaccination even when indirect /societal costs are included
negative NPV and bad benefit-cost ratio, high cost per QALY (>$100,000)
Additional Info Class Slides – Class 11 – November 28

11. 10. HEALTH - SMOKING
Study Arthur D. Little International, Inc. 2000. Public Finance Balance of Smoking in the Czech Republic.
What is the
purpose of the To compare the cost and benefits of smoking in the Czech Republic
analysis?
What are the
Study does not consider alternatives, just compares annual costs and benefits
policy options?
What is the
Czech Government
perspective?
Exclusive focus on financial impact of smoking - on government and government health insurance’s
Who has
standing? budget lines
What are the Smoking related public finance costs (from budget)
main costs? Direct and indirect health care costs (direct – smoker, indirect – others)
•
• Social costs related to higher morbidity
How are they
calculated? • Lost income tax due to early mortality
• Fire induced costs
What are the • Savings on housing for elderly, pension & soc. expenses due to early mortality of smokers
main
• Health care costs savings due to early mortality
impacts/benefits?
• Customs duty , corporate income tax and VAT
How are they
measured • Excise tax (largest income sources)
/valued Financial/budget costs
6.75%, corresponding to the interest rate on state bonds maturing in 4 years (unclear whether good rate
Discount rate?
or not)
Findings:
• Smoking costs the state budget less per year in health care costs, etc. than the government collects in
taxes and saves in retirement pensions and other government-provided services for the elderly
• Thus conclusion that cigarette consumption is beneficial for the Czech Republic
Main problems with this study:
• Perspective: narrow focus on government expenditures, excludes large private/internal costs, cost to
private employers
• No alternatives - should compare to scenario without smoking
• Definition of excise taxes as a benefit (only transfer, could be levied on something else)
• Unfortunate wording and presentation in general (saving money from having people die early should
not be presented as a positive externality)
• Obvious agenda – study commissioned by Phillip Morris (80% market share in the CR) at a time when
two anti-tobacco bills were being discussed in Parliament, one strengthening tobacco control
measures and one proposing tobacco advertising restrictions
Other studies on smoking usually include more costs, in particular internal costs (costs borne by the
individual), very different results (Eg. Taylor D etal. 2004. The Price of Smoking. MIT Press):
▫ Estimation of the social cost of smoking about $40 per pack of cigarettes:
Other
▫ $33 private cost: borne by the individual, primarily through a substantially shortened lifespan
▫ $5.50 quasi-external cost: borne by the smokers’ family through increased health costs, slightly lower
wages and other factors
▫ $1.50 external cost: borne by society, and representing the net effect of things like taxes paid,
Medicaid and Medicare payments, and Social Security received
Studies on the cost of smoking usually fall into 2 categories
a) Cost-of-illness studies
• Social costs of treatment, prevention and law enforcement; losses of productivity related to
morbidity and mortality; plus various measures of the quality of life-years lost
• Usually clearly distinguish between social (external) and private (internal) costs
• Individual acts rational in terms of internal costs, but external costs justify government intervention
(tax = external costs)
b) Studies based on theory of addiction
• Assumes individuals underestimate their dependency and cost of reducing/eliminating addition,
thus possibly justifying government intervention
• “Government intervention, such as tax increases, leads to less consumption of an addictive
substance and can help individuals to better assess eth cost of their addiction….”
• > Excise tax should exceed smoking-related external costs
Class Slides – Class 11 – November 28
Additional Info
http://theincidentaleconomist.com/wordpress/the-cost-of-smoking/

12. 11. TRANSPORTATION – SUBWAY CONSTRUCTION
Second Avenue Subway: Draft Environmental Impact 1999. Chapter 20. URL at:
Study
http://www.mta.info/capconstr/sas/documents/deis/chapter_20.pdf
Part of an Environmental Impact Study: Comparison of costs and benefits
What is the
purpose of the Environmental Impact Assessments (EIA) are interdisciplinary analyses of the natural, human health, and
cost benefit socio-cultural effects which are expected to result from public and private sector actions such as
analysis? development projects. The purpose of these studies is to comprehensively inform decision makers and the
affected public about both the proposed
4 options:
1. Do nothing
2. TSM: Small changes - Closer train spacing on Lexington Avenue line, bus priority lanes, Lower East
What are the
Side bus improvements
policy options?
3. Build alternative 1: Construction of New Upper East Side subway extension
4. Build alternative 2: Construction of New Upper East Side subway extension + light rail option on the
Lower East Side
What is the
perspective? MTA
Who has Standing: MTA and New York subway users
standing?
What are the
main costs? Alternative 3 and 4: Excavation, structures, signals, power and subway cars
Alternative 4: in addition, light rail train structures and trains
How are they Based on construction budgets/ previous expenditures
calculated?
• Reduced Subway Crowding, Faster and More Reliable Service on 2nd Avenue line
• Reduced Peak Period Crowding and Less Delay on other lines (Lines No. 4, 5, 2 and 3.)
• Reduced Off-Peak Standing - more passengers being able to get a seat (on Lexington No. 6 line)
What are the
• Faster and More Reliable Surface Transit Service
main
impacts/benefits
considered in Other:
the study? Reduced Auto and Taxi Travel
▫ Car Operating Costs Avoided
How are they ▫ Parking Costs Avoided
measured and ▫ Taxi Fares Avoided
what ▫ Emission Reductions (CO, NO, HC, etc.)
methodology is
▫ Noise Cost Avoided
used to value
them? ▫ Accident Cost Avoided
Travel time – time saved getting to and waiting for subway and time spent on subway costed using
average NYC wage rate (Out-of-vehicle time valued at a higher rate than in-vehicle time).
In addition - reduced crowding and standing – valued at % of wage rate
What discount
2.65% (MTA) and 7% (Federal Transportation Authority)
rate is used?
Not included:
Other Traffic interruption, congestion, effect on businesses, changes in property value along subway line
Additional Info NOT COVERED THIS SEMESTER