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Economic Evaluation in the age of Uncertainty

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Author Info
Giuseppe Pennisi (Advanced School of Public Administration, Rome, Italy)
Pasquale L. Scandizzo () (University of Rome, Tor Vergata, Italy)

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Abstract

Supporting value judgements about policies and programmes is a central task in evaluation. There is, however, little consensus on how evaluators are to accomplish this task.The traditional cost-benefit approaches were found wanting and yet valuation as promoted by checklists or qualitative stakeholder interviews is not anchored to an economic theory and thus inspires little confidence. While no single methodology is likely to be accepted by all, recent developments in economic theory support a new interpretation. This proposed approach is a variant of social cost benefit analysis (SCBA); it retains the representation of stakeholder values while avoiding the more dogmatic, and even mechanical, underpinnings of traditional economic analysis. In this article we trace the development of this new ‘options-based’ approach and chart out the path for further research. It warrants, we believe, a voice in the dialogue on economic evaluation.

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 86.

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Length: 15
Date of creation: 10 Dec 2006
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Handle: RePEc:rtv:ceisrp:86

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Keywords: Cost Benefit Analysis; Evaluation; Stakeholders; Real Option.;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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  1. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September. [Downloadable!] (restricted)
  2. Odin K. Knudsen & Pasquale L. Scandizzo, 2006. "Bringing Social Standards into Project Evaluation Under Dynamic Uncertainty," CEIS Research Paper 87, Tor Vergata University, CEIS.
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  3. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Blackwell Publishing, vol. 38(114), pages 175-208, April. [Downloadable!] (restricted)
  4. Hirschman, Albert O, 1982. "Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble?," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1463-84, December. [Downloadable!] (restricted)
  5. Basu, Kaushik, 2003. "Globalization and the Politics of International Finance: The Stiglitz Verdict," Working Papers 03-04, Cornell University, Center for Analytic Economics. [Downloadable!]
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  6. Merton, Robert C, 1973. "The Relationship Between Put and Call Option Prices: Comment," Journal of Finance, American Finance Association, vol. 28(1), pages 183-84, March. [Downloadable!] (restricted)
  7. Sen, Amartya, 2000. "The Discipline of Cost-Benefit Analysis," Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 931-52, June.
  8. Trigeorgis, Lenos, 1993. "The Nature of Option Interactions and the Valuation of Investments with Multiple Real Options," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 28(01), pages 1-20, March. [Downloadable!]
  9. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November. [Downloadable!] (restricted)
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