cost benefit analysis

(19th century- )

First examined by French engineer and economist Jules Dupuit (1804-1866) and later developed by 20th century economists, cost benefit analysis is the determination of the total value of a proposed investment's inputs and outputs.

Cost benefit analysis examines opportunity costs, externalities, shadow prices and estimates of future interest rates.

The technique was first used in the assessment of projects under the US Flood Control Act, 1936, and received a firmer theoretical underpinning by English economist John Hicks (1904-1989) in a 1943 paper on consumer surpluses.

Also see: consumer surplus, compensation principle, social welfare function

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