Working Paper: NBER ID: w30507
Authors: Jorge Luis Garcia; James J. Heckman
Abstract: This paper examines the economic foundations of three criteria used for evaluating the costs and benefits of social programs. Some criteria do not consider the scale of programs or address the costs associated with programs that expand or contract the total government budget. A recent addition to the list of evaluation criteria--the marginal value of public funds (MVPF)--does not adopt a social optimality perspective. It evaluates the optimality of expenditures assuming a predetermined aggregate budget without considering the social costs of raising that budget.
Keywords: No keywords provided
JEL Codes: D61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| marginal value of public funds (MVPF) (H49) | inefficient program evaluations (C52) |
| MVPF does not account for the social costs of raising revenue (H29) | inefficient program evaluations (C52) |
| BCR and MVPF (G24) | do not provide highest net social benefits (NSB) (H49) |
| BCR and MVPF ignore the scale of the projects being evaluated (H43) | do not provide highest net social benefits (NSB) (H49) |
| NSB is the appropriate criterion for evaluating social programs (H53) | should be undertaken from a social planner's perspective (H43) |
| projects with a non-negative NSB (H43) | should be undertaken from a social planner's perspective (H43) |
| true social costs of funding government expenditures must be included (H59) | accurate assessments of social programs (H53) |