Teaching Benefit-Cost Analysis
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Teaching Benefit-Cost Analysis

Tools of the Trade

Edited by Scott Farrow

Teaching Benefit-Cost Analysis provides detail and inspiration that extends and clarifies standard textbooks. Each short, self-contained module includes guidance to additional sources while many also provide class exercises. Classes for advanced undergraduates, practitioners, or Masters students could especially apply these tools of the trade.
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Chapter 2: Triangles and all that

Arnold C. Harberger

Abstract

This chapter presents a simple exposition of general equilibrium applied welfare economics. It focuses first on the efficiency costs of a set of tax distortions on different goods, and then explores the efficiency effects of adding a new tax to a set of already existing ones. It near considers non-tax distortions such as pollution and traffic congestion, followed by a discussion of distributional weights and basic needs externalities. Finally, it deals briefly with several strategic issues involved in implementing a national system for the benefit-cost analysis of public investments and other expenditures.

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