Applied Welfare Economics 2nd Edition 2022 Hardbound by Florio, Massimo, Taylor and Francis Ltd

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Taylor and Francis Ltd Applied Welfare Economics 2nd Edition 2022 Hardbound by Florio, Massimo

Applied Welfare Economics: Cost-Benefit Analysis for Project and Policy Evaluation presents a consistent framework for applied welfare economics and is grounded in a comprehensive theory of cost-benefit analysis, specifically focused on offering a practical approach to policy and project evaluation. After opening with a theoretical discussion of the concept of social welfare, a critical analysis of the traditional doctrine of welfare economics embodied in the Two Fundamental Theorems, and a presentation of social cost-benefit analysis, the book introduces readers to an applied framework. This includes the empirical estimation of shadow prices of goods, the social cost of labour and capital, and the assessment of risk. The book also examines real-life experiences with cost-benefit analysis, including ex-post evaluation of major projects, economic rates of return in different sectors, and a case study on privatisation. These chapters draw on first-hand research gained by the author team from years of advisory work for the European Commission and other international and national institutions. This second edition presents updated data, more international examples, and more coverage of topics such as very long run discounting effects and climate change as an intergenerational effect. It also includes more practical examples and end-of-chapter questions to aid student's learning. Applied Welfare Economics is a valuable textbook for upper-level courses on welfare economics, cost-benefit analysis, public policy analysis and related areas._x000D_ _x000D_ Chapter 1: On Social Welfare _x000D_ _x000D_ Overview_x000D_ _x000D_ 1.1. The concept of social welfare*_x000D_ _x000D_ 1.1.1 Gross Domestic Product as welfare measurement_x000D_ _x000D_ 1.1.2 Income and final consumption_x000D_ _x000D_ 1.1.3 A digression on money in welfare economics_x000D_ _x000D_ 1.2. The welfare assumptions behind GDP and NNP_x000D_ _x000D_ 1.3. Individual and social welfare_x000D_ _x000D_ 1.4. Determinants of individual welfare: goods_x000D_ _x000D_ 1.5. Determinants of social welfare: individual utilities_x000D_ _x000D_ 1.5.1 Aggregating individual utilities_x000D_ _x000D_ 1.5.2 Interpretation of welfare weights_x000D_ _x000D_ 1.6. Sen's critique of individualistic Social Welfare Function_x000D_ _x000D_ 1.7. Paternalism and not (only) individualistic Social Welfare Functions_x000D_ _x000D_ 1.8. Happiness economics_x000D_ _x000D_ 1.9. 'Positive' analysis_x000D_ _x000D_ 1.10. Further reading_x000D_ _x000D_ 1.11. Summary of Chapter 1_x000D_ _x000D_ Chapter 2: The two Fundamental Theorems re-examined_x000D_ _x000D_ Overview_x000D_ _x000D_ 2.1. Theorems versus Intuitions_x000D_ _x000D_ 2.2. The Arrow-Debreu (AD) Economy (*)_x000D_ _x000D_ 2.3. The axiomatic structure (*)_x000D_ _x000D_ 2.4. Consumers, producers and government: objectives and constraints (*)_x000D_ _x000D_ 2.5. The Walrasian equilibrium_x000D_ _x000D_ 2.6. The two Theorems without ideology_x000D_ _x000D_ 2.7. The informative structure: Stiglitz's critique_x000D_ _x000D_ 2.8. Critical analysis of the Second Theorem_x000D_ _x000D_ 2.9. The government rediscovered in second-best economies_x000D_ _x000D_ 2.10. Further reading_x000D_ _x000D_ 2.11. Summary of Chapter 2_x000D_ _x000D_ Appendix A2.1 - Policies based on the Second Theorem: lump-sum transfers_x000D_ _x000D_ Appendix A3.1: Some results from Dreze and Stern (1987) _x000D_ _x000D_ Marginal social value of producer prices_x000D_ _x000D_ Marginal social value of commodity taxes_x000D_ _x000D_ Marginal social value of a production constraint _x000D_ _x000D_ Chapter 3: Shadow prices and the social planner_x000D_ _x000D_ Overview_x000D_ _x000D_ 3.1. Introductory remarks_x000D_ _x000D_ 3.2. A model for project and policy evaluation_x000D_ _x000D_ 3.3. A second best economy in the DS frame_x000D_ _x000D_ 3.4. Policy reforms and shadow prices_x000D_ _x000D_ 3.5. Multi-government setting_x000D_ _x000D_ 3.6. Why using shadow prices? _x000D_ _x000D_ 3.7. Further reading_x000D_ _x000D_ 3.8. Summary of Chapter 3_x000D_ _x000D_ Chapter 4: The social cost of goods_x000D_ _x000D_ Overview_x000D_ _x000D_ 4.1. Observed prices and financial analysis_x000D_ _x000D_ 4.2. Accounting prices and economic analysis_x000D_ _x000D_ 4.2.1 Conversion of market prices to shadow prices_x000D_ _x000D_ 4.2.2 Extension of project boundaries: externalities and indirect effects_x000D_ _x000D_ 4.2.3 Assessing the economic performance_x000D_ _x000D_ 4.3. Empirical approaches for guessing accounting prices_x000D_ _x000D_ 4.4. The border price rule for tradable goods_x000D_ _x000D_ 4.5. The Standard Conversion Factor_x000D_ _x000D_ 4.6. The long run marginal cost_x000D_ _x000D_ 4.7. Willingness-to-pay_x000D_ _x000D_ 4.7.1 Definition and scope of application_x000D_ _x000D_ 4.7.2 Stated preferences approaches_x000D_ _x000D_ 4.7.3 Revealed preferences approaches_x000D_ _x000D_ 4.7.4 Benefit transfer approach_x000D_ _x000D_ 4.8. Further readings_x000D_ _x000D_ 4.9. Summary of Chapter 4_x000D_ _x000D_ Appendix A4.1: Financial analysis_x000D_ _x000D_ The financial return on investment_x000D_ _x000D_ The financial return on capital_x000D_ _x000D_ Financial performance indicators_x000D_ _x000D_ Financial sustainability_x000D_ _x000D_ Dealing with taxes in the financial analysis_x000D_ _x000D_ Appendix A4.2: An example of financial and economic analysis_x000D_ _x000D_ Chapter 5: The social cost of labour_x000D_ _x000D_ Overview_x000D_ _x000D_ 5.1. Earlier literature on the social opportunity cost of labour_x000D_ _x000D_ 5.1.1 Theoretical contributions_x000D_ _x000D_ 5.1.2 Empirical contributions_x000D_ _x000D_ 5.2. A conceptual model for the social cost of labour_x000D_ _x000D_ 5.3. The shadow wage rate and labour market conditions_x000D_ _x000D_ 5.3.1 Simplifying the Little-Mirrlees formula for the SWR_x000D_ _x000D_ 5.3.2 Empirical formulae_x000D_ _x000D_ 5.4. Empirical estimation of shadow prices for EU regions_x000D_ _x000D_ 5.4.1 Data and methods_x000D_ _x000D_ 5.4.2 Estimation of the SWRs_x000D_ _x000D_ 5.5. Further reading_x000D_ _x000D_ 5.6. Summary of Chapter 5_x000D_ _x000D_ Chapter 6: The social cost of capital_x000D_ _x000D_ Overview_x000D_ _x000D_ 6.1. Rationale for discounting_x000D_ _x000D_ 6.2. Estimating the social discount rate_x000D_ _x000D_ 6.2.1 The social rate of return on private investments (SRRI) _x000D_ _x000D_ 6.2.2 The social rate of time preference (SRTP) _x000D_ _x000D_ 6.2.3 The weighted average method_x000D_ _x000D_ 6.2.4 The shadow price of capital_x000D_ _x000D_ 6.3. The social discount rate as a function of time_x000D_ _x000D_ 6.4. Empirical estimates of the social discount rate_x000D_ _x000D_ 6.4.1 International evidence: SDRs recommended in selected countries_x000D_ _x000D_ 6.4.2 An example of SRTP estimation_x000D_ _x000D_ 6.5. The opportunity cost of public funds_x000D_ _x000D_ 6.6. Further reading_x000D_ _x000D_ 6.7. Summary of Chapter 6_x000D_ _x000D_ Chapter 7: Welfare weights and distributional impacts_x000D_ _x000D_ Overview_x000D_ _x000D_ 7.1. Why are equity considerations needed in CBA? _x000D_ _x000D_ 7.2. Deriving welfare weights_x000D_ _x000D_ 7.3. Estimation of distributional weights_x000D_ _x000D_ 7.4. The distributional characteristic of goods_x000D_ _x000D_ 7.5. Group and regional welfare weights_x000D_ _x000D_ 7.6. Basic needs and social affordability_x000D_ _x000D_ 7.6.1 The basic needs approach_x000D_ _x000D_ 7.6.2 Social affordability analysis_x000D_ _x000D_ 7.7. Further reading_x000D_ _x000D_ 7.8. Summary of Chapter 7_x000D_ _x000D_ Chapter 8: Risk assessment_x000D_ _x000D_ Overview_x000D_ _x000D_ 8.1. Rationale of the risk assessment_x000D_ _x000D_ 8.2. Definitions and concepts_x000D_ _x000D_ 8.3. Historical background: the World Bank model_x000D_ _x000D_ 8.4. Sensitivity analysis_x000D_ _x000D_ 8.4.1 Identification of the critical variables_x000D_ _x000D_ 8.4.2 Approaches to test the sensitivity of the CBA model_x000D_ _x000D_ 8.5. Probability analysis_x000D_ _x000D_ 8.5.1 Probability distributions of the critical variables_x000D_ _x000D_ 8.5.2 Dealing with correlations between the critical variables_x000D_ _x000D_ 8.6. Risk Analysis_x000D_ _x000D_ 8.6.1 Monte Carlo simulations_x000D_ _x000D_ 8.6.2 Evaluation of the investment's riskiness_x000D_ _x000D_ 8.7. Further reading_x000D_ _x000D_ 8.8. Summary of Chapter 8_x000D_ _x000D_ Appendix A8.1: Distributions of probabilities_x000D_ _x000D_ Appendix A8.2: Monte Carlo method_x000D_ _x000D_ Theoretical framework of the Monte Carlo method_x000D_ _x000D_ Choice of the number of simulations_x000D_ _x000D_ Appendix A8.3: Generating correlated random numbers_x000D_ _x000D_ Modeling dependence through conditional distributions_x000D_ _x000D_ Modeling dependence through copulas_x000D_ _x000D_ Chapter 9: International evaluation practices_x000D_ _x000D_ Overview_x000D_ _x000D_ 9.1. National traditions and operative guidelines_x000D_ _x000D_ 9.1.1 United Kingdom_x000D_ _x000D_ 9.1.2 France_x000D_ _x000D_ 9.1.3 United States of America_x000D_ _x000D_ 9.2. The use of cost-benefit analysis in the EC regional policy_x000D_ _x000D_ 9.3. Multilateral development banks_x000D_ _x000D_ 9.3.1 The European Investment Bank_x000D_ _x000D_ 9.3.2 The World Bank_x000D_ _x000D_ 9.4. Further reading_x000D_ _x000D_ 9.5. Summary of Chapter 9_x000D_ _x000D_ Chapter 10: Ex-post project evaluation _x000D_ _x000D_ Overview_x000D_ _x000D_ 10.1. Timing and scope of CBA _x000D_ _x000D_ 10.2. Performing ex-post CBA _x000D_ _x000D_ 10.2.1 Project border identification_x000D_ _x000D_ 10.2.2 Reference scenario_x000D_ _x000D_ 10.2.3 Demand analysis_x000D_ _x000D_ 10.2.4 Willingness-to-pay_x000D_ _x000D_ 10.2.5 Shadow prices_x000D_ _x000D_ 10.2.6 The social discount rates_x000D_ _x000D_ 10.3. International practice of ex-post CBA _x000D_ _x000D_ 10.4. CBA and the decision-making process _x000D_ _x000D_ 10.5. Interpretation of variability of ex-ante vs ex-post or re-estimated internal rates of return _x000D_ _x000D_ 10.6. Comparison between ex-ante and ex-post economic rates of return _x000D_ _x000D_ 10.7. CBA and incentives_x000D_ _x000D_ 10.8. Further reading_x000D_ _x000D_ 10.9. Summary of Chapter 10_x000D_ _x000D_ Chapter 11: The use of cost-benefit analysis in regulatory policy _x000D_ _x000D_ Overview_x000D_ _x000D_ 11.1. Adopting CBA for regulatory impact assessment: rationale and main elements _x000D_ _x000D_ 11.2. International practices _x000D_ _x000D_ 11.2.1 United States_x000D_ _x000D_ 11.2.2 United Kingdom_x000D_ _x000D_ 11.2.3 European Union_x000D_ _x000D_ 11.2.4 Other experiences_x000D_ _x000D_ 11.3. A key tool for good governance? Some critical considerations _x000D_ _x000D_ 11.4. Further reading_x000D_ _x000D_ 11.5. Summary of Chapter 11_x000D_