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Bequests, control rights, and cost-benefit analysis

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  • Glazer, Amihai
  • Kanniainen, Vesa
  • Niskanen, Esko

Abstract

Consider a public project which produces a consumption good and which benefits future generations. Let a conventional cost-benefit analysis find that it gives higher benefits than projects it would dis-place in the private sector. Voters may nevertheless oppose the public project: the combination of a desire to control bequests and the lack of control over who gets benefits from a public project makes the public project unattractive. In contrast, private projects have owners, allowing parents to control whether their children will receive the benefits from such projects. Parents can therefore better influence the behavior of their children when they have the option of giving the children title to private projects.
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  • Glazer, Amihai & Kanniainen, Vesa & Niskanen, Esko, 2003. "Bequests, control rights, and cost-benefit analysis," European Journal of Political Economy, Elsevier, vol. 19(1), pages 71-82, March.
    • Handle: RePEc:eee:poleco:v:19:y:2003:i:1:p:71-82
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    2. Jurgita Baranauskiene & Vilija Alekneviciene, 2019. "Comprehensive Measurement of Social Benefits Generated by Public Investment Projects," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 15(4), pages 195-210.
    3. Jurgita Baranauskiene & Valdemaras Makutenas & Albina Novosinskiene, 2014. "What Are Left Underestimated Using Cost-Benefit Analysis For Public Project Evaluation?," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 8(1), pages 856-867.

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