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Study Notes




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REVEALED PREFERENCE METHODS MARKET ANALOGY METHOD TRAVEL COST METHODS DEFENSIVE EXPENDITURES METHOD INTERMEDIATE GOOD METHOD ASSET VALUATION METHOD THE HEDONIC PRICE METHOD Table 1: QUALY Costs l : t Program Childhood immunizations <0 Prenatal care <0 Flu shots $1200 Water chlorination $8K Pneumonia vaccination $24K Breast cancer screening $34K r ra hildhood i unizations <0 renatal care <0 Flu shots $1200 ater chlorination $8 neu onia vaccination $24 reast cancer screening $34 Table 1: QUALY Costs l : t Program OSHA Construction safety rules $76K EPA home radon standards $280K EPA asbestos standards $3.8M EPA radiation standards $54M Source: (John D. Graham, et. al, 1994) r ra onstruction safety rules $76 ho e radon standards $280 asbestos standards $3.8 radiation standards $54 Source: (John D. Graham, et. al, 1994) Regulatory Policies and Practices Health and Safety Environmental Figure 1: TYPES OF REGULATION i r : I Source: Thomas D. Hopkins (2006) AN ASSESSMENT OF CROSS-NATIONAL REGULATORY BURDEN COMPARISONS. Fordham Urban Law Journal (July: 9-48) Figure 2: FEDERAL REGULATORY OUTLAYS i r : Source: file:///Work/Courses/ABC-04/pubfin/REGBUD~1.HTM Figure 3: Costs of Major Rules (1981-2007) i r : t f j r l ( - ) Source: http://www.whitehouse.gov/omb/inforeg/costs_benefits/2008_draft_cb_report.pdf Figure 4: Benefits and Costs of Major Rules (1992-2007) i r : fit t f j r l ( - ) Source: http://www.whitehouse.gov/omb/inforeg/costs_benefits/2008_draft_cb_report.pdf Costs and Benefits Requiring Valuation t fit iri l ti Costs and Benefits Requiring Valuation t fit iri l ti MARKET ANALOGY METHOD MARKET ANALOGY METHOD Using Price of Analogous Good - The market price of a comparable good in the private sector - Problematic when beneficiaries don’t pay market prices Using Price and Quantity of an Analogous Private- Sector Good to Estimate the Demand Curve for a Publicly Provided Good - Use private-sector data to map the demand curve for a publicly-provide good if the goods and their markets are similar. - Using expenditures alone ignores consumer surplus. Using Price of Analogous ood - The market price of a comparable good in the private sector - Problematic when beneficiaries don’t pay market prices Using Price and uantity of an Analogous Private- Sector ood to Esti ate the De and Curve for a Publicly Provided ood - Use private-sector data to map the demand curve for a publicly-provide good if the goods and their markets are similar. - Using expenditures alone ignores consumer surplus. Example: Using Price of Analogous good xa ple: sing rice of nalogous good Note: distinction between Comparable and substitutes MARKET ANALOGY METHOD Using the Market Analogy Method to Value Time Saved - The obvious analogous market for time saved is the labor market.But… 1) Wages ignore taxes and fringe benefits. 2) People could be working while traveling or waiting and, therefore, time saved would be worth less than the wage rate (plus benefits). 3) People value different types of time differently. Importantly, many people enjoy traveling. 4) Method assumes working hours are flexible – (ignores structural rigidities and failures). 5) Firms may not pay employees their marginal social product. ...





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