Although most economists and public officials understand the theory of cost-benefit analysis, there seems to be great difficulty when it comes to applying this technique to "real world" problems. This paper critically examines a cost-benefit study undertaken for a proposed rapid transit system in the Los Angeles metropolitan area in order to illustrate the problems and to suggest alternative methods for treating them. For the proposed Los Angeles rapid transit system, the benefit cost ratio is favorable (exceeds unity) only because: (1) many benefits are incorrectly calculated due to such factors as inflation, anticipated unemployment reductions and expenditure decreases, along with double counting and the inclusion of nonquantifiable benefits; (2) many costs are understated or omitted entirely; and (3) the passenger estimates are overly optimistic. This last point is particularly important since passenger estimates are curcual to a cost-benefit study of any rapid transit system. /Author/

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  • Corporate Authors:

    University of Wisconsin Press

    Journals Department 129, Box 1379
    Madison, WI  United States  53701
  • Authors:
    • Peterson, T
  • Publication Date: 1975-2

Media Info

  • Features: References; Tables;
  • Pagination: p. 72-79
  • Serial:
    • Land Economics
    • Publisher: University of Wisconsin Press
    • ISSN: 0023-7639

Subject/Index Terms

Filing Info

  • Accession Number: 00083816
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Apr 22 1981 12:00AM