GSE806 Economic Evaluation Techniques
About this Unit
Next Offering: Semester 2, 2009 (Unit is offered in alternate years)
Offered: D2 - Day; Second Half-Year (Block mode delivery)
Convenor: Professor Dodo Thampapillai
Prerequisite: GSE810 OR Economics Degree
Credit Points: 4
The aim of this course is to introduce the course participants to the concepts and methods that are central to the economic appraisal of projects. Special attention will be given to public sector investments. The use of economics for project appraisal may appear to present a narrow focus. Nevertheless, we broaden the scope here by drawing from the principles of Welfare Economics and Environmental and Social Economics. We also attempt to relate the economic appraisal techniques to legal and ethical considerations. The challenges surrounding the application of relevant concepts and methods will be illustrated by recourse to two case studies. These case studies constitute a major part of the assessment for this course as indicated below.
The on campus sessions will be conducted on block mode and there will be two blocks, dates to be adviced. In the lead up to these on-campus sessions, course participants are expected to follow a reading guide that is centred on the main text of this course and participate in a web-based discussion forum.
Teaching Staff
Convenor: Professor Dodo J Thampapillai
Email: dthampap@gse.mq.edu.au
Classes
Lectures: Two on-campus sessions.
Unit web page
TBA
Learning Outcomes
Teaching and Learning Strategy
Topics and Readings
Please note that the readings indicated below are intended only for providing an introductory treatment of the relevant topics. Additional and more advanced set of readings are listed in the supplementary readings under Required and Recommended Texts/Materials.
Topic 1: Nature and Scope of CBA: The issues of social choice and the ranking of alternatives.
Reading: Sinden and Thampapillai (1995) Chapter 1.
Topic 2: Welfare Economics Basis for CBA
Reading: Sinden and Thampapillai (1995) Chapters 2 and 3.
Topic 3: Identification of Benefits and Costs
Reading: Sinden and Thampapillai (1995) Chapter 4.
Topic 4: Valuation of Benefits and Costs – imperfect markets
Reading: Sinden and Thampapillai (1995) Chapter 5.
Topic 5: Valuation of Benefits and Costs – absent markets
Reading: Sinden and Thampapillai (1995) Chapter 6.
Topic 6: Timing of Benefits and Costs – Discounting and criteria
Reading: Sinden and Thampapillai (1995) Chapters 7-9.
Topic 7: Risk Analysis and Sensitivity Analysis.
Reading: Sinden and Thampapillai (1995) Chapter 10.
Topic 8: Multi-Criteria Analysis.
Tentative Schedule for First On-Campus Session
| dd/mm/2008 | Topics |
|---|---|
| 09.00 - 09.30 | Nature and scope of CBA |
| 09.30 - 10.30 | Welfare economics - Principles |
| 10.30 - 10.45 | BREAK |
| 10.45 - 12.00 | Identification of Benefits and Costs |
| 12.00 - 13.00 | Valuation of Benefits and Costs: Imperfect Markets |
| 13.00 - 14.00 | LUNCH |
| 14.00 - 15.30 | Valuation of Benefits and Costs: Absent Markets |
| 15.30 - 15.45 | BREAK |
| 15.45 - 17.00 | Valuation of Benefits and Costs: Absent Markets |
| dd/mm/2008 | |
| 09.00 - 10.30 | Discounting and Criteria |
| 10.30 - 10.45 | BREAK |
| 10.45 - 12.00 | Risk Analysis |
| 12.00 - 13.00 | LUNCH |
| 13.00 - 15.30 | Multi-criteria Analysis |
| 15.30 - 17.30 | Discussion on Case Study |
Second On-Campus Session
The second session will be primarily devoted to the completion of the case study and the analytic questions. The program for these two days will be finalized during the first on-campus session in consultation with the course participants.
Reading and Course Preparation Guide
The aim of providing this guide is to facilitate preparation for the on-campus lecture/discussion sessions. As indicated in the unit outline, the lectures will closely follow the main text.
This reading guide contains the following:
- A set of references to supplement the main text
- A suggested timetable for covering the key topics
- A case for the discussion forum
On the completion of first four topics, the discussion board will be open for a period of seven days (as per the schedule given below). During this period:
- Course participants are encouraged to reflect and comment on the topic and post it to me for display on the discussion board.
- You could also comment on the contributions made by your fellow course participants.
| Date | Topics | Chapters in Main Text | Supp. Reading |
|---|---|---|---|
Nature and scope of CBA and Welfare Economics |
1-3 | Capsular view of CBA (On Blackboard) ADB Chapters 1-5 Mankiw Chapter 7 |
|
Identification of Benefits and Costs |
4 | ADB Chapter 6 | |
Discussion Board Open: Topic for Discussion Attempt to identify and justify the priced and unpriced benefits and costs in the major case study from the perspective of PNG society |
|||
| Valuation of Benefits and Costs: Imperfect Market | 5 | Thampapillai, Mahendrarajah & Drake (2005) posted on Blackboard ADB Chapter 7 |
|
| Valuation of Benefits and Costs: Absent Markets | 6 | Dixon et al. | |
Relationship between Assessment and Learning Outcomes
| Assessment | Marks | Due |
|---|---|---|
| Discussion Forum | 10% | |
| Case Study | 60% | |
| Analytic Questions | 30% |
The discussion forum deals with potential projects dealing with reconstruction in war-torn economies. The issue is described below and you are expected to post your views on identifying benefits and costs with reference to this problem by dd/mm/2008.
The case study (which is also described below – The Case of a Dedicated Researcher) is a hypothetical problem (which has all the semblances of a real world issue). You are required to write a report on how this problem can be evaluated. You will be better equipped to complete this task at the end of the first on-campus session. This is due on dd/mm/2008.
The Analytic Questions will be based on the material covered during the first on-campus sessions – The Questions are given below. The response to these will be due on dd/mm/2008 – You will receive tutorial assistance for these during dd/mm/2008.
Required and Recommended Texts/Materials
Main Text
Sinden, J.A. and Thampapillai, D.J. Introduction to Benefit Cost Analysis, Addisson-Wesley Longman, Melbourne 1995.
Supplementary Readings
Identification of Benefits and Costs
Asian Development Bank, Guidelines for the Economic Analysis of Projects, 1997. (On-line edition: http://www.adb.org/Documents/Guidelines/Eco_Analysis/default.asp
Valuation of Benefits and Costs – Imperfect Markets
Thampapillai, D.J and Lim Boon Tiong. Shadow Prices for Outcomes in Distorted Markets, Mimeograph, LKY School of Public Policy, National University of Singapore, 2005 (This will be posted on the Blackboard platform)
Dasgupta, P., Sen, A.K., and Marglin, S., Guidelines for Project Evaluation, UNIDO, Vienna, 1972.
Dinwiddy, C.L. and Teal, F.J., Foreign Exchange Equivalence and Project Appraisal Procedures, Economic Journal, 100 (401):567-76, 1990.
Lal, D., Shadow Pricing and Wage and Employment Issues in National Economic Planning, in Lal, D., (Ed) Development Economics, Edward Elgar, London, 1992.
Little, I.M.D. and Mirlees, J.A., Project Appraisal and Planning for Developing Countries, Heinemann, London, 1976.
Papps, I., Shadow Pricing with Price Controls, Scottish Journal of Political Economy, 40(2): 199-209, 1993.
Valuation of Benefits and Costs – Absent Markets
Asian Development Bank, Guidelines for the Economic Analysis of Projects, 1997. (On-line edition: http://www.adb.org/Documents/Guidelines/Eco_Analysis/default.asp
Thampapillai, D.J and Quah E., The Valuation of Environmental Goods and Services: A Review, in Quah (2002).
Thampapillai, D.J., The Elimination of Absolute Poverty: Approaches to Monetary Valuation, Indian Economic Journal, 1989.
Dixon, J.A., Scura, L.F., Carpenter, R. and Sherman, P.B., Economic Analysis of Environmental Impacts, Earthscan, London, 1997
Plagiarism
The University defines plagiarism in its rules: "Plagiarism involves using the work of another person and presenting it as one's own." Plagiarism is a serious breach of the University's rules and carries significant penalties. You must read the University's practices and procedures on plagiarism. These can be found in the Handbook of Postgraduate Studies or on the web at: http://www.student.mq.edu.au/plagiarism/
The policies and procedures explain what plagiarism is, how to avoid it, the procedures that will be taken in cases of suspected plagiarism, and the penalties if you are found guilty. Penalties may include a deduction of marks, failure in the unit, and/or referral to the University Discipline Committee.
The GSE recommends that students familiarise themselves with the information contained on the Georgetown University Honor Council website which discusses plagiarism in an easy to understand and comprehensive manner.
University Policy on Grading
Academic Senate has a set of guidelines on the distribution of grades across the range from fail to high distinction. Your final result will include one of these grades plus a standardised numerical grade (SNG).
On occasion your raw mark for a unit (i.e., the total of your marks for each assessment item) may not be the same as the SNG which you receive. Under the Senate guidelines, results may be scaled to ensure that there is a degree of comparability across the university, so that units with the same past performances of their students should achieve similar results.
It is important that you realise that the policy does not require that a minimum number of students are to be failed in any unit. In fact it does something like the opposite, in requiring examiners to explain their actions if more than 20% of students fail in a unit.
The process of scaling does not change the order of marks among students. A student who receives a higher raw mark than another will also receive a higher final scaled mark.
For an explanation of the policy see:
http://senate.mq.edu.au/rules/Guidelines2003.doc or
http://senate.mq.edu.au/rules/detailedguidelines.doc
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