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The article assesses the economic value of the investment in the doctor of philosophy (Ph. D.) degree in economics. To derive the internal rate of return to the Ph. D. in economics, conventional cost-benefit methodology is used. A five-way classification was utilized to determine the variations in the conditions surrounding graduate work in economics. These classification are: by type of employment, method of financing, length of schooling, salary and earnings as measures of income and private and social cost-and-benefit perspectives.

The article presents a commentary on the paper "The Economic Effectiveness of On-the-Job Training: The Experience of the Bureau of Indian Affairs in Oklahoma," by Loren C. Scott. It argues that Scott manipulated the data in order to prove the training of employees in the state is economically justifiable. The study compares the rates of return in the bureau's program and three other studies on the subject. It suggests that the relative success of training programs should not be assessed alone on the basis of the benefit-cost ratios or rates of returns.

This article examines and compares the ranking characteristics of Benefit-Cost Ratios and Net Present Value. The algebraic analysis of the author shows the circumstances under which these evaluation techniques give a contradictory ranking of investment projects and identifies the differing implicity reinvestment assumptions where the validity of these assumptions is examined. There is still dispute concerning which technique is preferable under uncertainty and which under capital rationing according to the author.

THIS paper focuses on the results and implications of recent cost studies in banking. Additional materials are discussed with a view toward placing the cost analyses in perspective. The following section provides a definition of a "socially optimal" banking structure in order to indicate the possible importance of returns to scale in banking. Succeeding sections consider the cost studies individually and provide an interpretation of their findings. An addendum treats selected problems of recent banking-structure research outside the area of cost analysis. [ABSTRACT FROM AUTHOR]

The economics textbooks now pouring from the competing presses give more attention to the behavior of costs and returns as influenced by variation factoral proportion than did the older treatises. Formerly, "diminishing returns" were explained simply and briefly. The fact of diminishing returns was said to be known to every practical farmer. Once stated, with a few simple hypothetical illustrations, it was supposedly patent to the most obtuse sophomore. The basic conception of returns in relation to variation of factors is now essentially that successive equal additions, or doses, of the variable factor, or input, applied to a definite quantity of the factor held constant, yield, up to a certain amount of input, successively larger increments of return. That theorem must therefore be taken for what it is, a keen piece of pure theory, applicable in real life as far as men are alertly efficient in choosing size of operations and in ordering factoral proportion, and as far as they are not bound by contractual relations, cause them to occupy more land than they have resources to work to the maximum advantage.

The article discusses the capacity of utilization and efficiency varience. Efficiency variance is analogous to the usual fixed overhead efficiency variance. The aim of this article is to clarify the framework and to appraise the place of an efficiency variance within that framework. Distinctions between effectiveness and efficiency are frequently very helpful in discussing planning and controlling. Effectiveness is the accomplishment of a desired objective. Efficiency is an optimum relationship between input and output. Efficiency is monitored by other means via the usual labor efficiency variances and similar variances that analyze variable cost factors. The use of an efficiency variance is helpful because it often explains why capacity was ineffectively utilized. However, for reasons explained in an earlier article, expressing the efficiency variance in terms of historical costs is objectionable. The association of the capacity efficiency variance with the expected idle capacity variance is an unnecessary direct link that may be more confusing than helpful.

The findings of this study can be summarized briefly. (1) Formal occupational training in proprietary schools and other settings and cumulated experience on a particular job are important modes of human capital investment in the United States, with noticeable impacts on earnings and occupational position. For older working men, proprietary vocational training raises earnings proportionately as much as formal schooling and has a similar private rate of return. Current job experience also has a substantial effect on individual earnings, suggesting the importance of specific training or experience in determining earnings, possibly linked to formal seniority systems. (2) Proprietary school training is distinguished by stressing vocational skills and job placement; covering a wide spectrum of non- academic curricula; varying the length of courses and tuition to a great extent; operating to reduce foregone work time. Because of lower time costs, the total cost of proprietary training is similar to that of colleges and universities, despite higher tuition. Because of lower public subsidization, the social rate of return of proprietary training appears to exceed that of higher education. (3) The effect of formal occupational training differs among workers and job markets. The earnings of older (45-59-year-old) black men were raised relatively more by proprietary and company training and by years of experience on the current job than those of whites -- in contrast to the greater effect of formal schooling on white incomes. Men working in the area of their formal job training have greater returns than those in other fields, consistent with a productivity-gain interpretation of the training. This paper has noted but not investigated the possible deleterious effect of an expanded junior and community college system on proprietary schools.

There are few modern instances of development with public funds of a technologically advanced product that is to be produced, very likely by a monopoly, and used commercially by private firms. Desirable guidelines in such cases are: (1) continuation only so long as the program is expected to earn a rate of return comparable to that expected by the U.S. industry in making investments; (2) equal government sharing in such a rate of return, partly to avoid subsidization, but also to provide incentives for only economical design changes, etc.; (3) full recoupment by government, plus an equity or risk-taker's return, except insofar as their clearly are net "external" or national interests; (4) recoupment by government of its advances, not by taxes that reduce sales and use, but through some partnership arrangement; (5) no unrecovered government subsidies except where adequate benefits are likely to be diffused among a large fraction of citizens. Finally, it is to be hoped and expected that a U.S. prototype of an supersonic transport will be flying well before the end of the 1970's, one that promises to be safe and profitable without being a public nuisance because of sonic boom. This means a state of art that will permit a rate of return of at, least 10 percent on all resources invested in development after 1966 without supersonic flight over populated land areas. Until proposed designs can give this promise with more confidence it seems premature to begin construction of a prototype aircraft.

This paper develops a theoretical framework for the application of cost-benefit analysis to management education in developing countries. Social returns are estimated through a combination of the import substitution and income creation approaches, both of which are considered in the evaluation of investment. The cost-benefit analysis of a major national project in India within this framework shows that its educational program has a positive net present value even at a social discount rate as high as 13 percent. The net returns appear to be quite sensitive to the values assigned to the foreign exchange rate, discount rate, and price elasticity. The purpose of this paper is to report the results of the cost-benefit analysis of a specialized branch of education in India. The branch selected is management education, which, though relatively new to India, is likely to expand significantly, given the managerial and organizational problems facing the country. The first section of the paper presents a conceptual framework of the cost-benefit analysis appropriate to management education.[1] The second section reports the results of the cost-benefit analysis of a national institution for management education in India. The conclusions of the study and its relevance for educational planning are summarized in Section III of the paper. [ABSTRACT FROM AUTHOR]

This article presents an analysis of Robert Dorfman's theoretical paradox, using it as a vehicle for exploring the prescriptive force of benefit-cost techniques. Benefit-cost analysis attempts to discover what quantities of some specified goods are considered by the gainers and losers from some proposed government action to be just equivalent in value to their respective gains and losses. The algebraic sum of the quantities of goods over all individuals is then used to assist in deciding whether to undertake the action. It is pointed out that a project passes the benefit-cost test if this net sum is positive. There is at least a presumption that projects passing the benefit-cost test should be undertaken, and those failing should be rejected.

This article presents an examination of methods designed to measure the economic desirability of investments. These methods include the net present value method and several benefit-cost ratios. The authors point out that both measures account for the time value of money; however, they differ in ways that produce contradictory results in a variety of instances. The authors investigate these instances where contradictory results are produced in order to gain a better understanding of how effectively these measurements can be applied to evaluating the performance of investments.

The article presents the author's comments on the paper "Cost-Benefit Analysis and the Theory of Public Finance," by Richard Musgrave, an economist, related to cost benefit analysis and the theory of public finance. According to the author, Musgrave correctly points out that cost-benefit analysis is merely a framework for making economic decisions. If the cost, the benefits and the appropriate discount rate are known, the technique can be used to ascertain the profitability of an investment. Musgrave attempts to explain social investment decisions making under cost-benefit analysis. However, according to the author, his explanation is misleading, because it fails to isolate accurately the social rate of discount with the internal rate of return. According to the author, the possibility of any increase in required taxes to cover government losses is a risk which raises the cost of capital to the private sector. This increase in the private rate of discount reduces the wealth of the private sector. Thus the public sector should continue to invest only as long as the net present value of social projects exceeds the loss in private wealth caused by the rise in the private rate of discount.

This article develops a model which describes the expected costs of adopting an insurance program which has a deductible feature. Rules for choosing the least expected cost deductible level are developed for policies with aggregate deductibles and for those with straight deductibles. Also, it is noted that the decision maker may not want to move from a smaller deductible to a lower cost larger one if the expected cost benefits are small and the risk assumption is large. [ABSTRACT FROM AUTHOR]

THE case for taking a careful look at educational expenditure in African countries rests simply on its size, in relation to government expenditure as a whole and to national income. As Table I (overleaf) shows, most African governments devote a considerably higher proportion of their total spending to education than does, for instance, the British Government. [ABSTRACT FROM PUBLISHER]

Estimates of the cost and gain attributable to water-resource projects (eg, irrigation or flood-control measures) are often used to help winnow out the ones that should be undertaken This sort of comparison, which is usually called 'cost-benefit analysis,' is closely related to systems analysis and operations research, all of these activities pose problems of formulating analyses and devising tests of preferredness In this connection, three points are discussed and illustrated (a) With a given water-resource budget, maximization of the present value of net benefits is a better test than the maximization of the conventional benefit-cost ratio (b) The alternatives that are compared should be water-resource 'systems'-each consisting of a proposed project added onto existing watershed features and projects As new projects are approved and constructed, the other proposals added onto the original watershed features may no longer be the relevant alternatives (c) The alternatives that are compared should include project-increments, not just huge 'lumps' [ABSTRACT FROM AUTHOR]

The article presents a schedule of events relating to management science in 1971. Fourth Annual Simulation Symposium in Tampa, Florida on March 12 to 14. International Federation of Operations Research Societies on April 12 - 15. Conference on International Cost Effectiveness to be held in Washington, D. 13th Annual Conference of the Canadian Operational Research Society on June 9 - 1 1 in Ottawa. Ninth Annual Conference of the Special Interest Group on Computer Personnel Research of the Association for Computing on June 21 - 22, 1971.

This article presents the author's reply on the geometric discussion of the economics of patents which has been clarified by economist F. M. Scherer. I wish in this reply to point out some problems with the pure theory and suggest that the implications are rather different from those drawn in Scherer's article. The problem of the supply of invention has been raised by Scherer. He has pointed out quite correctly that the pure case assumes that profits are positive at the optimal life, which may not be the case. The pure case refers only to small process inventions. For drastic inventions and process inventions, the inventor can recover a smaller fraction of the gains from invention since the royalty is less than the cost reduction. Given other parameters, then, the optimal life is longer for drastic and product inventions. We have assumed that patenting takes place in a stationary economy, with no general cost reduction or competition from other new inventions. A more likely case is that the firm will lower its price by a fraction of the cost saving in order to increase its market share. If the firm succeeds in increasing its market share, the resulting output will be produced at lower cost, increasing the average efficiency in the industry.

This article focuses on economic consequences of knowledge-acquisition process in the U.S. The value of such knowledge is not instrumental in an economic-technological context. It is equally clear that contributors to the growth of knowledge have all along been motivated largely by a desire to improve their understanding of the world into which they were born. The costs of generating progress consist of the costs of producing new knowledge, and the costs of increased per-capita knowledge-distribution, and of the extra-costs of changeovers from the use of old to the use of new knowledge. A substantial part of the progress-generating costs of each period is incurred by decision makers subjected to the criterion of private economic yield. The progress costs falling in this category consist mainly of the costs of privately financed research and development and of the extra costs of changing over to new industrial processes. Another large part of the progress-generating expenses is incurred by agencies not institutionally subjected to criteria of economic yield.

The development of benefit-cost analysis has given impetus for agencies to collect data and make analyses leading to serious estimates of the worth of projects. Pressure to refine the analyses accompanying project proposals continues to be an influence improving planning and evaluation procedures. The accomplishments are so impressive that it may be wondered whether methodological improvements are needed. This paper raises several questions about assumptions underlying benefit-cost analysis. The questions lead to tentative suggestions for extensions which aim to do away with the often criticized narrowness of usual procedures and still keep rigor to prevent nonsense evaluations. The ground to be covered in the paper may be briefly outlined. The point of departure is the usual rationale that market valuations are good measures of benefits from project outputs and of opportunities foregone due to project costs. An analysis of effects of various kinds of slack suggests that market valuations may overstate project effects.

The article offers a few comments on criteria for undertaking water resource developments in the U.S., in the context of a concern with sorts of social priorities which various alternative criteria may express or implement. Author's attention will center on four issues which are either treated or neglected in received writings, namely the general investment criterion, as defined in terms of the relation of benefits to costs and as made specific for assumed constraints on the investing agency's budget, the interest rate to be used, by way of making this criterion articulate, in discounting future benefits and costs, the timing of investment and the avoidance of premature investment and the influence of procedures in benefit calculation on the design of projects, with especial reference to the role of so-called intangible benefits. The government should undertake welfare increasing investment in areas in which private enterprise is institutionally discouraged from undertaking it at all or in requisite amounts or ways.

This article discusses the concept of tax efficiency from the narrows of costs of tax collections into which it frequently falls in discussions of tax policy and highlights the effects of tax policy upon the two most important economic variables in the social welfare function; namely, the distribution of income (equity) and the size of the total income to be distributed (efficiency). Determination of the best combination of these two variables necessitates knowledge of what combinations are possible; i.e., how the possibilities are affected by government's tax and expenditure policy and how various combinations are ordered in the preference system of the community. Minimum tax collections per dollar of government expenditure without specifying the kinds of taxes to be levied, could not be seriously considered as an objective of tax policy. The amount of taxes to be collected is itself a variable which need not be economized. If one level of tax collections is not sufficiently deflationary, there is another higher level which is. Minimizing the deflationary impact of a given amount of taxes-or minimizing the amount of tax collected in order to provide a given deflationary impact, would conflict with concepts of equity.

A consumer-demand or subjective-value approach to valuing government health activities is recommended. The human-capital valuations generally used in cost-benefit analysis are unrelated to peoples' preferences and, therefore, irrelevant to political decisions. A number of important policy conclusions emerge from applying the suggested principle that government activities be valued on the basis of what people would be willing to pay for them: Beyond programs to aid the poor, government health efforts should be restricted to overcoming deficiencies in the operations of the private marketplace; that is, to regulatory actions, control of infectious disease and environmental pollution, and aid to biomedical research. Free services provided to the poor should be justified by the willingness of the nonpoor to pay for them. Thus, the preferences of the nonpoor are important in designing optimal poverty programs. Under present circumstances, direct money transfers to the poor seem preferable to further increases in poverty medical programs. The value of existing programs could be increased by giving more weight to what the poor want instead of what medical experts say is most important for their health. [ABSTRACT FROM AUTHOR]

The past decade has witnessed the development of a technique of equilibrium value analysis which, although built upon the foundation of the neo-classical tradition, denies the validity of its emphasis on the competitive character of the price system. Monopolistic conditions are to be regarded as ubiquitous and determining, rather than exceptional and inconsequential, features of modern economic life. The re-orientation consists in according analytical recognition to the joint influence of monopolistic and competitive elements in the determination of normal equilibrium values. Although only the basic framework of the theory has been laid, the importance and permanence of its influence on thought are now beyond question. [ABSTRACT FROM AUTHOR]

Practically all existing analyses covering the obsolescence or the improvement of productive facilities are concerned with equipment replacement. An extension of such considerations to general capital investment analysis would seem to be a natural development. The present analysis is related to an investment decision on the expansion of productive capacity in discrete steps with facilities which undergo technological improvement. First, the analysis for expansion in one step is developed after the effects of technological improvement on the price and operating cost of a future facility have been introduced. The discussion of one-step expansion is then extended to an N-step expansion. In both types of expansion, the necessary conditions for optimum values of investment decision variables are obtained in order to maximize the present value of the net profit over the planning period. [ABSTRACT FROM AUTHOR]

The article discusses the cost-benefit analysis applied by a government to monitor its expenditures. These are analytic methods introduced primarily due to the need to make public administrators produce more economically rational decisions. Cost-benefit analysis, as described, is designed to supplement the usual financial calculations with measurements of the economic benefits and costs of a project to its consumers and to society as a whole; determine effective ways of operating public services; and apply in the quasi-commercial areas of government activity and in such non-market areas. And to differentiate cost-benefit analysis from other methods used for evaluating private investment projects, the definitions of both are required to be looked up to.

The performance of population programmes suggests that even the more successful ones have acceptance rates that are only a fifth or so of what is needed to reduce population growth rates to the 1% a year that permits significant improvements in income per head. It is also clear that no programmes use bonuses at anything approaching the monetary values per recipient that are justifiable. There is no guarantee that such bonuses will produce the number of acceptors that are needed, but it is fairly evident that without larger bonuses there will not be enough acceptors.Briefly, if bonuses are to become an effective and acceptable feature of national family planning programmes, they must meet at least the following requirements:(1) The various bonuses must be an integral part of an evolving and expanding system, and such bonuses must be evaluated in terms of the same criteria used to evaluate the overall family planning programme.(2) Bonuses should be substantial, equal to perhaps one-half or more of the maximum that society, through government, can afford to pay for reduced fertility.(3) Bonus qualification and administration should be reasonably cheat-proof, and the majority of couples using contraceptives should not be able to collect more than one kind of bonus.(4) Selective discrimination among acceptors, at least by age, should be attempted by government to reduce payments of unnecessarily large bonuses to those who would practise effective contraception for a smaller bonus.(5) Bonuses should be used to gain the acceptance of more cost-effective methods, or of more fertile couples, even during early stages when a family planning programme is generally supply constrained.Finally, because in a real sense transfer payments are less costly than more customary activities incurring resource costs, bonuses should be used whenever their budget cost is no greater than more traditional expenditures that are equally effective in terms of reducing births. As such bonuses are really a form of compensation, paying for valuable services undertaken at some inconvenience and sacrifice, there is nothing morally reprehensible in paying them. Moreover, inasmuch as poorer people are most likely to respond, there is a favourable income redistribution effect and, of course, a prospect of higher average incomes because of the fertility reduction. [ABSTRACT FROM PUBLISHER]

Comments on an article about cost-benefit rules for poorer countries. Reasons for requiring cost-benefit analyses of investment projects; Disadvantages of a faster rate of growth or additional objectives such as improved distribution of a product; Implications of full employment and free trade equilibrium in calculating an accounting price of traded goods.

Now that the U.S. Federal Trade Commission and the Department of Justice have become more active in their attack upon big business, it seems appropriate to analyze the relative efficiency of large-scale enterprise. The existence of this efficiency has been accepted by certain business groups and set forth as one if not the major justification for the continuance of such large corporations, while evidence to the contrary has been seized, at times enthusiastically and rather uncritically, as sufficient reason for demolishing the giants. Efficiency is a word which is used more often than it is understood. Perhaps this is because it can be employed in different ways which do not have a common meaning. As an economic term efficiency is necessarily related to cost, and that business is most efficient which has the ability to produce and market goods or services at the lowest cost possible under the environmental circumstances lacing the management. It should be quite obvious that comparability as to external circumstances is of primary significance. When businesses are operating under such conditions it is reasonable to conclude that the one with lowest cost is the most efficient. This low cost, however, is significant only if continued for a period of years, so that it is clearly based on efficiency of operation rather than on some unusually fortunate circumstance or accounting adjustment.

The need for some form of profit limitation in wartime is generally recognized. Spending on an economy geared to peacetime production is such that excessive profits must inevitably arise at many points. The conversion of a peacetime economy into a wartime economy not only creates new scarcities, but it also requires businessmen to produce goods, which they have never produced before. Under these Circumstances costs cannot be accurately estimated and profits may prove to be excessive. Furthermore, higher prices may be needed to encourage production by marginal producers, thereby giving windfalls with aspect to output previously produced. On the other hand, it is the duty of the government to see that a few do not profit from the sacrifices of the many. Profits have a positive contribution to make even in a wartime economy. Profits have a positive contribution to make even in a wartime economy. In most sectors of the economy, the normal peacetime role played by profits in determining what and how much will be produced has been taken over by the government. But the profit motive still has an important part to play within this framework by providing incentives to control waste and inefficiency and to keep production costs from rising. The profit motive is not, of course, the only factor contributing to these ends, but its importance should not be underestimated.