Question

Imagine that a politician has been asked to support the public good proposals below. In order not to waste money and improve her chances of reelection, she makes her decisions based on a cost-benefit analysis. In each of the situations, should she support or reject the proposal?
a) repairing a broken dam that is a major source of hydroelectric power for a large city
b) fixing a pothole along a lightly used street
c) installing streetlights in a community where there has been a lot of crime
d) building a flood control system for an area that floods once every 100 years

Answer 1

Answer:

a) repairing a broken dam that is a major source of hydroelectric power for a large city  - Support

The Cost-benefit Analysis here will show a high benefit because the city relies on the dam to produce electricity. If the dam is repaired, the productivity of the city can increase which translates to higher benefits.

b) fixing a pothole along a lightly used street  - Reject

The pothole being fixed is not very cost effective because the road is not being used by many. The chances of a high number of cars being damaged therefore is low so resources should not used to fix this road unless in excess.

c) installing streetlights in a community where there has been a lot of crime  - Support

Criminals feel emboldened by darkness because they are concealed better and can escape faster. Installing lights will reduce crime and criminals will be spotted faster and their escape will be made harder. She should support this initiative as the benefits outweigh the costs.

d) building a flood control system for an area that floods once every 100 years - Reject

The time taken for the area to flood in the area is quite high. There is therefore no point in installing a flood control system at the moment when resources are a bit scarce. She should not support this initiative for the time being.