Public Finance, 2nd Edition

the public may have diYculty understanding the rationale for shadow prices,

that they point the way toward maximizing eYciency or social welfare, not

proWt.

CONCLUSION

Put the remarks in this chapter to the test. Review numerous cost±beneWt

studies prepared by (or for) public agencies or read the congressional hear-

ings or media accounts of proposed government projects (or subsidies for

private investments), and see if the bogus ``issues'' discussed here predomin-

ate. Our experience is that they nearly always do. Careful cost±beneWt ana-

lyses, highlighting the issues presented in Chapters 24±27, appear to be the

exception.

REFERENCE

McKean, R., EYciency in Government Through Systems Analysis, Wiley, New York, 1958.

28. COMMON PITFALLS IN COST±BENEFIT ANALYSIS 827

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