Evaluating the benefits and costs of any action is fundamentally determined by the baseline, which determines the basis of comparison for the action. However, the topic of a baseline is often given limited attention in benefit-cost analysis (BCA) textbooks and journal articles, despite the fact that this is one of the first issues economists confront when doing applied analysis. This paper addresses the gap by discussing some of the nuances of defining and constructing a defensible baseline and illustrates these nuances with examples from the US Environmental Protection Agency (EPA). Core materials for BCA teachers include the narrative as well as links to documents, websites and regulatory impact analyses illustrating these baseline nuances.
Charles Butcher and Ryan Griffiths
In this chapter we outline a formal model to explain variations in the internal structure of states and the types of state systems that they form. We classify polities according to whether they control their foreign policy and whether they give resources to an aspiring imperial center through transfers or by allowing the center to directly extract them. Variations along these two dimensions differentiate six sovereign bargains from full independence to imperial absorption. We then specify the payoffs for each of these bargains and explore the role of interaction capacity and international competition as potential causes of the change from transfer-based bargains to direct extraction. We find interaction capacity to be a strong explanation for this transition, and while international competition may deepen existing forms of extraction it does not appear to explain well the transition from transfers to direct extraction. We provide a preliminary test of these ideas with a comparative case study of the Oyo empire in West Africa and Mysore in South India during the eighteenth and nineteenth century.