What you will learn - Learning outcomes: This course will introduce you to the methodology of Cost-benefit analysis. By the end of the course, you will

1. Understand the most important concepts of microeconomic theory behind CBA, including compensating variation, equivalent variation, Potential Pareto Improvements, Consumer surplus, Producer surplus and Government surplus.
2. Understand how to value the impacts and the value of outcomes of projects affecting market prices. Please note that Environmental valuation methods, used to value quantity changes of non-market goods, such a contingent valuation, travel cost method, etc. are taught in the Environmental Valuation course by Anna-Kaisa Kosenius. The students should learn the basic principles of benefit-transfer.
3. Estimate the demand function from cross-sectional data, and use it to calculate changes in consumer surplus.
4. Be able to distinguish between impacts in the primary markets and the secondary markets, and understand when the impacts in the secondary markets should be included in the CBA.
5. Learn the basics of how to include health effects into CBA.
6. Understand the impact of the choice of the discount rate on the net present value of a project, illustrate and critically assess the different theories regarding the choice of the discount rate, and calculate the net present value of a project.
7. Understand how uncertainty is incorporated into cost-benefit analysis in both theory and practice, and perform expected value analysis and Monte-Carlo sensitivity analysis.
8. Understand how distributional issues can be incorporated into cost-benefit analysis and perform a simple distributionally weighted cost-benefit analysis.
9. Understand, illustrate and critically appraise the philosophical and ethical underpinnings of CBA.
10. Critically assess CBA-studies and distinguish a well-conducted CBA from a poor one.

Target group: This course is a master level course.

Prerequisites: Microeconomics provides the primary foundation for cost-benefit analysis. Preferably students enrolling in this course should have a knowledge of intermediate microeconomics. If you have a knowledge of microeconomics at the introductory level or relevant work experience, you can still enroll in the course. However, you should be prepared to spend extra time learning the underlying microeconomics principles and tools.

Timetable: Fourth period and summer 2020.  The  course page will open Monday March 16th 2020.  The course is self-paced but exam dates are fixed for all. There will be a final exam and two retakes. 

Time requirements: This is a five credits course. as one credit requires on average 27 hours of work, be prepared to invest roughly 135 hours on coursework. The course is self-paced. 

How you will work in this course: the course is divided into different topics. As there is a progression from one topic to the other, please start from topic one and work your way to the end of the course. For each topic, you will find lecture videos and other learning materials. For some topics there will be also online tests that will help you to evaluate your understanding of the topic and to prepare for the final exam. These tests are formative only, meaning that they will not contribute to your final grade.

Final exam and grading: the final exam will be an online exam including questions similar to those you encountered in the online formative tests.  The grade for the exam will be 1-5 (1 = pass, 5 = excellent). 

Earning a course certificate: 
  • The course is open to all students enrolled at the university of Helsinki. 
  • If you are not enrolled at the university of Helsinki but you have a Finnish social security number, you can earn a certificate upon passing the final exam by enrolling in the course in the summer at the University of Helsinki open university.  
  • If you do not have a Finnish social security number, unfortunately you will not be able to obtain a certificate of course completion. 
  • All interested in cost-benefit analysis are welcome to audit the course, go through the course materials and do the tests.

This course is offered by the Master program in Agricultural, Environmental and Resource Economics (AGERE) in collaboration with the Digileap project of the University of Helsinki