A Proposal to Build a Dam on a Wild River

question 71

Multiple Choice

A proposal to build a dam on a wild river may look like a good idea from the cost/benefit study done by the Army Corps of Engineers, but an analysis done by the Sierra Club might suggest that the dam would be a complete waste of money. When different groups give us radically different cost/benefit results:

• A) we have an example of how cost/benefit analysis does not work as a way of forming policy.
• B) the studies may still be useful if we can see the underlying assumptions and estimates of each group.
• C) we should realize that sometimes it is best to trust in the political process rather than try to use an economic approach.
• D) we should conclude that the best way to decide who is telling the truth is to find which group has the best intentions.