Benefit-cost analysis is essentially a structured comparison. Thus, as the first step in a benefit-cost analysis, the analyst must specify the program or policy being evaluated and the program or option with which it will be compared. This specification should include information on such factors as the persons being served, the treatments being offered, and the environment in which the program or policy will operate. These two alternatives—the program and the comparison situation—essentially define the scope, and ultimately the results, of the analysis. All work in the study, including the interpretation of the findings, must be undertaken in relation to these two alternatives.
KeywordsShadow Price Fringe Benefit Gross National Product Shadow Prex Alternative Program
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