Kaisa_2012_3_photo by Veikko Somerpuro

Welcome to learn cost-benefit analysis

Plese note that the course syllabus and course materials can be found at https://mooc.helsinki.fi/course/view.php?id=310

What you will learn - Learning outcomes: This course will introduce you to the methodology of Cost-benefit analysis. By the end of the course, you will

1. Understand the most important concepts of microeconomic theory behind CBA, including compensating variation, equivalent variation, Potential Pareto Improvements, Consumer surplus, Producer surplus and Government surplus.
2. Understand how to value the impacts and the value of outcomes of projects affecting market prices. Please note that Environmental valuation methods, used to value quantity changes of non-market goods, such a contingent valuation, travel cost method, etc. are taught in the Environmental Valuation course by Anna-Kaisa Kosenius. The students should learn the basic principles of benefit-transfer.
3. Estimate the demand function from cross-sectional data, and use it to calculate changes in consumer surplus.
4. Be able to distinguish between impacts in the primary markets and the secondary markets, and understand when the impacts in the secondary markets should be included in the CBA.
5. Learn the basics of how to include health effects into CBA.
6. Understand the impact of the choice of the discount rate on the net present value of a project, illustrate and critically assess the different theories regarding the choice of the discount rate, and calculate the net present value of a project.
7. Understand how uncertainty is incorporated into cost-benefit analysis in both theory and practice, and perform expected value analysis and Monte-Carlo sensitivity analysis.
8. Understand how distributional issues can be incorporated into cost-benefit analysis and perform a simple distributionally weighted cost-benefit analysis.
9. Understand, illustrate and critically appraise the philosophical and ethical underpinnings of CBA.
10. Critically assess CBA-studies and distinguish a well-conducted CBA from a poor one.

Target group: This course is a master level course.

Prerequisites: Microeconomics provides the primary foundation for cost-benefit analysis. Preferably students enrolling in this course should have a knowledge of intermediate microeconomics. If you have a knowledge of microeconomics at the introductory level or relevant work experience, you can still enroll in the course. However, you should be prepared to spend extra time learning the underlying microeconomics principles and tools.

Timetable: Fourth period and summer 2020. The course page will open Monday March 16th 2020. The course is self-paced.

Time requirements: This is a five credits course. as one credit requires on average 27 hours of work, be prepared to invest roughly 135 hours on coursework. The course is self-paced.

How you will work in this course: the course is divided into different topics. As there is a progression from one topic to the other, please start from topic one and work your way to the end of the course. For each topic, you will find lecture videos and other learning materials. For some topics there will be also online tests that will help you to evaluate your understanding of the topic and to prepare for the final exam. These tests are formative only, meaning that they will not contribute to your final grade.

Final exam and grading: the final exam will be an online exam including questions similar to those you encountered in the online formative tests. The grade for the exam will be 1-5 (1 = pass, 5 = excellent).

Earning a course certificate:
The course is open to all students enrolled at the university of Helsinki.
If you are not enrolled at the university of Helsinki but you have a Finnish social security number, you can earn a certificate upon passing the final exam by enrolling in the course in the summer at the University of Helsinki open university.
If you do not have a Finnish social security number, unfortunately you will not be able to obtain a certificate of course completion.
All interested in cost-benefit analysis are welcome to audit the course, go through the course materials and do the tests.

This course is offered by the Master program in Agricultural, Environmental and Resource Economics (AGERE) in collaboration with the Digileap project of the University of Helsinki

Enrol
14.2.2020 at 08:00 - 10.4.2020 at 23:59

Interaction

If you have any questions about the course, please be in touch with course assistant Tiina Tamminen, Tiina.tamminen@helsinki.fi

Timetable

Fourth period, spring term 2020 and summer 2020

The final exam will take place on the 7th of May from 5 pm to 8 pm. There will be two retakes: Thursday June 11th from 5 pm to 8 pm and Thursday August 13th from 5 pm to 8 pm.

Material

Description

Open to all students of the University of Helsinki.

A good complement to this course is the course AGERE-003 Valuation.

A good complement to this course is the course Environmental Valuation.

To familiarize the student with the basic methods of cost-benefit analysis (hereafter CBA) and their application to the evaluation of projects and policies. By the end of the course students should be able to:

1. Estimate the impacts and value the outcomes of projects using market prices, as well as have a very basic understanding of how outcomes that are not as easily measured in monetary terms are valued

2. Calculate the net present value of a project.

3. Understand the impact of the choice of the discount rate on the net present value of a project, illustrate and critically assess the different theories regarding the choice of the discount rate

4. Understand how uncertainty is incorporated into cost-benefit analysis and perform both partial and Montecarlo sensitivity analysis.

5. Understand how distributional issues can be incorporated into cost-benefit analysis and perform a simple distributionally weighted cost-benefit analysis

6. Understand the difference between cost-effectiveness and cost-benefit analysis and critically appraise the advantages and limitations of these two methods.

7. Understand, illustrate and critically appraise the philosophical and ethical underpinnings of costbenefit analysis.

8. Critically assess cost-benefit analyses and distinguish a well-conducted cost-benefit analysis from a poor one.

Spring term, third period, odd years.

This course uses the flipped learning method. Before coming to class the students will:

  • read the assigned chapters of the textbook, course notes and other written materials and watch the assigned lecture videos
  • do the Moodle test related to the aforementionedmaterials

Contact teaching will be spent on different activities that encourage students to process and apply cost-benefit analysis methods and principles. Class time will be structured around conceptual questions and exercises, case studies, discussions, and mini lectures.

  1. Textbook The required textbook is: Boardman, A.E., D.H. Greenberg, A.R. Vining, and D.L. Weimer. 2011. Cost-Benefit Analysis: Concepts and Practice (Fourth Edition). Upper Saddle River, N.J.: Pearson. (Hereafter Boardman et al.)
  2. Other required reading materials will include peer-reviewed articles and reports and will be available on Moodle either directly or as a link to the University library resources.

Supplementary readings will be indicated at the during the course though Moodle

The course grade will be based on the following components:

• Group work

• Final exam

• Pre-class Moodle tests

• Class participation and engagement

Microeconomics provides the primary foundation for cost-benefit analysis. Students enrolling in this course should have a knowledge of intermediate microeconomics (Y56a+b or equivalent course). Students who have only taken an introductory level microeconomics course such as Y55a Microeconomics principles or have particularly relevant experience can still enrol in the course. However they should be prepared to spend extra time learning the underlying microeconomic principles and tools.

Chiara Lombardini, Väinö Nurmi

Replaces the course 863010 Cost-Benefit Analysis 5 cr.