Essay on public investment criteria and the role of cost benefit analysis in the implementation of economic planning for economic development in India - criteria include consumption benefits, costs, time factor, interest, budgetary constraints, risk and dynamics. References pp. 100 and 101.

This book, first published in 1967, explores some of the problems formulating investment criteria for the public sector of a mixed-enterprise, underdeveloped economy. The typical essay on public investment criteria explicitly or implicitly postulates a single goal for economic analysis – maximization of weighted average of national income over time – and relegates all other objectives of public policy to a limbo of "political" and "social" objectives not amenable to systematic, rational treatment. In contrast Professor Marglin assumes a multiplicity of objectives and explores ways and means of expressing contributions to different objectives in common terms. The book also investigates the relationship of specific investment criteria to the objectives of public policy. Benefits and costs are defined separately for each objective, as are so-called "secondary" benefits. This book is suited for students of economics.

Examines interest rate policy used in discounting benefits and costs of government projects, focusing on need to raise 3 1/4 % interest rate currently used for Interior Dept water project assessments.

​This volume presents the most robust and useful methodology for the measurement of the economic effects of public investments. This methodological approach solves inherent defects of the traditional methodology, namely, an ad hoc application of the cost---benefit ratio analysis based on a simple summation of itemized economic effects on public investment criteria. In particular, it comprehensively solves (1) leakage and duplication of economic effects calculated; and (2) arbitrariness of the public investment choice set. The methodology adopts the general and dynamic simulation approach and solves defect (1). Secondly, the assignment of the public investment budget for all the possible and not predetermined investment targets is endogenously optimized to reflect the opportunity cost criterion. Applications of the methodology are also included in the book, which is helpful for practitioners as well as experts who wish to learn about the meaning of the theoretical argument related to public investment, including economic effects and the opportunity cost criterion.

As clearly stated by Pareto, no society can avoid the economic problem of "opposition between tastes and obstacles" that is, as in other categories of economic decisions, investments in education have to take into account their opportunity cost. This implies that when education policies need to be implemented, there is a previous need of comparing different actions and evaluating them to assess their attractiveness. In this comparison process, one of the technical difficulties which has to be solved is the choice of the correct mathematical aggregation rule (i.e. the commonly called investment evaluation criterion or discount method) to use.^The internal rate of return (IRR) is widely used in educational policy and planning; the main justifications are three: 1) the choice of a discount rate may vary for different countries and at different times, while IRR is an "objective" measure, 2) IRR allows the comparison with investments in the private sector, and 3) IRR allows the comparison of investments in different educational fields, such as primary schooling and university (by simply considering the average rates of return in each field). However, the debate on the proper evaluation criterion to use, when a private investment decision has to be taken or a public project appraisal has to be carried out, is a traditional one in financial, public and production economics. Although the considerable amount of existing literature, the problem of the choice of the right investment evaluation criterion is still an open one.^The majority of authors claim that net present value (NPV) is a superior criterion and thus it is the one to be always used. Other authors try to show that various investment evaluation criteria, under specific conditions, arrive at the same recommendation. This research aims at clarifying this controversial topic by focusing on some clear cut formal properties of the various investment evaluation criteria and by considering the empirical characteristics of the different fields of application. Clear guidelines for education investment evaluation will be drawn.