IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v250y2025ics0165176525001272.html
   My bibliography  Save this article

Ranking public expenditure programs

Author

Listed:
  • Almlund, Mathilde
  • Andersen, Torben M.

Abstract

The marginal value of public funds (MVPF) has been proposed as a criterion for choosing between social programs, but its appropriateness has been debated. In this paper, we show the MVPF is indeed providing the correct ranking when deciding on marginal increases in net spending, but it is not a valid criterion for selecting policies on which to increase marginal up front spending. In this case, the correct criterion is the Marginal Net Social Benefit (MNSB). This distinction is crucial for policymakers who operate under a fixed up front budget. We demonstrate that previous arguments in favor of the opposite conclusion rely on implicit assumptions of constant returns to scale.

Suggested Citation

  • Almlund, Mathilde & Andersen, Torben M., 2025. "Ranking public expenditure programs," Economics Letters, Elsevier, vol. 250(C).
    • Handle: RePEc:eee:ecolet:v:250:y:2025:i:c:s0165176525001272
    DOI: 10.1016/j.econlet.2025.112290
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176525001272
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2025.112290?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. García, Jorge Luis & Heckman, James Joseph, 2022. "Three Criteria for Evaluating Social Programs," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 13(3), pages 281-286, October.
    2. Nathaniel Hendren & Ben Sprung-Keyser, 2022. "The Case for Using the MVPF in Empirical Welfare Analysis," NBER Working Papers 30029, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Montpetit, Sébastien & Beaureard, Pierre-Loup & Carrer, Luisa, 2024. "A welfare analysis of universal childcare: Lessons from a Canadian reform," CLEF Working Paper Series 73, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    2. Spencer Bastani, 2023. "The Marginal Cost of Public Funds: A Brief Guide," CESifo Working Paper Series 10322, CESifo.
    3. Benjamin Collier & Sabrina T. Howell & Lea Rendell, 2024. "After the Storm: How Emergency Liquidity Helps Small Businesses Following Natural Disasters," Working Papers 24-20, Center for Economic Studies, U.S. Census Bureau.
    4. Britta Rude, 2024. "Middle-run educational impacts of comprehensive early childhood interventions: evidence from a pioneer program in Chile," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-30, June.
    5. Katarzyna A. Bilicka & Michael P. Devereux & İrem Güçeri, 2024. "Tax Policy, Investment and Profit Shifting," NBER Working Papers 33132, National Bureau of Economic Research, Inc.
    6. Jean Tirole & Paul-Henri Moisson & Pierre Dubois, 2023. "The (Ir)Relevance of the Cooperative Form," Working Papers hal-04963853, HAL.
    7. Goetz, Alexander & Mayr, Harald & Schubert, Renate, 2024. "One thing leads to another: Evidence on the scope and persistence of behavioral spillovers," Journal of Public Economics, Elsevier, vol. 236(C).
    8. Joaquín Herrera & Martin González-Rozada & Hernan Ruffo, 2025. "The Fiscal Costs of Unemployment Insurance," Department of Economics Working Papers 2025_09, Universidad Torcuato Di Tella.
    9. Christiansen, Tobias Gabel, 2024. "Dynamic effects of tax audits and the role of intentions," Journal of Public Economics, Elsevier, vol. 234(C).

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:250:y:2025:i:c:s0165176525001272. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.