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Limitations of the with and without Principle in Benefit-Cost Analysis

Author

Listed:
  • John G. Hof

    (USDA Forest Service, Fort Collins, Colorado)

  • Douglas B. Rideout

    (Colorado State University)

Abstract

This article evaluates common applications of the "with and without principle" in benefit-cost analysis. This principle is often used to analyze and justify individual projects and purposes by comparing their separable costs with separable benefits. These comparisons are shown to be unreliable, especially when nonmarginal output changes are evaluated. Simple examples demonstrate the theoretical points.

Suggested Citation

  • John G. Hof & Douglas B. Rideout, 1989. "Limitations of the with and without Principle in Benefit-Cost Analysis," Public Finance Review, , vol. 17(2), pages 216-226, April.
    • Handle: RePEc:sae:pubfin:v:17:y:1989:i:2:p:216-226
    DOI: 10.1177/109114218901700205
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    References listed on IDEAS

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    1. M. M. Regan & E. C. Weitzell, 1947. "Economic Evaluation of Soil and Water Conservation Measures and Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(4_Part_II), pages 1275-1294.
    2. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 11-32.
    3. Hof, John G. & Lee, Robert D. & Dyer, A. Allen & Kent, Brian M., 1985. "An analysis of joint costs in a managed forest ecosystem," Journal of Environmental Economics and Management, Elsevier, vol. 12(4), pages 338-352, December.
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