PP Presentation

• The Kaldor-Hicks criterion: The idea that a policy is efficient if it generates the greatest aggregate net (monetary) benefit.

• Pareto-efficient policy: If there is no other policy option that can make some people better off without making anyone else worse off.

• The usual method of conducting benefit/cost analysis is to maximize the present discounted value (PDV) of net monetary benefits.

• An alternative method is to select policies that generate the greatest amount of monetary benefit for each dollar of cost, called the benefit/cost ratio.

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