Bequests, Control Rights, and Cost-Benefit Analysis
19 Pages Posted: 30 Oct 2001
Date Written: October 2001
Consider a public project which produces a consumption good and which benefits future generations. Let a conventional cost-benefit analysis find that it gives higher benefits than projects it would displace in the private sector. Voters may nevertheless oppose the public project: the combination of a desire to control bequests and the lack of control over who gets benefits from a public project makes the public project unattractive. In contrast, private projects have owners, allowing parents to control whether their children will receive the benefits from such projects. Parents can therefore better influence the behavior of their children when they have the option of giving the children title to private projects.
Keywords: Public Projects, Cost-benefit Analysis
JEL Classification: H43
Suggested Citation: Suggested Citation