Bequests and Cost-Benefit Analysis
AbstractConsider a public project which produces a consumption good and which benefits future generations. Let a conventional cost-benefit analysis find that it gives higher benelits than projects it would displace in the private sector. Voters may nevertheless oppose the public project. The cause of the opposition arises from the absence of property rights and from the bequest motive of parents. Private projects have owners, allowing parents to control whether their children will receive the benefits from such projects. Parents can therefore pay for services from their children by giving them title to private projects. In contrast, public projects yield benefits to future generations independently of the care children give their parents.
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Bibliographic InfoPaper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 117.
Date of creation: 01 Jan 1996
Date of revision:
Other versions of this item:
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
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