Applied cost-benefit
analysis: Alternative question = ‘Who should pay for higher education?’ ‘Who
should pay for the resource cost of investment?’
§ Would
the net present value of the project be positive?
§ Would
the social rate of return exceed the social rate of discount?
Set
up analysis:
§
What is the criterion in a public-sector appraisal
issue? Discuss (1) private/social returns, (2) the difficulty of measuring
them, (3) the inter-temporal dimension. There is then the question of what the
social discount factor should be. Social rate of time preference, or other
plausible discount rates.
§
Cost of investing more in higher education:
-
Expanding institutional costs (profs, capital,
buildings). The marginal cost of an extra student is negligible. Economies of
scale when capital is fully variable. New technology –
Human capital analysis
points to tuition