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<strong>PSI</strong> – Postsecondary Institution.
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aggregate output (E2)<br />An OUtput measure of the NATIONAL INCOME calculated by summing the amount of VALUE ADDED contributed by each industry. This aggregate is measured at FACTOR cosT.
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cost-benefit analysis (C1, D6, R1)<br />The evaluation of an investment project with a long-term perspective from the viewpoint of the economy as a whole (although it is sometimes used in the private sector) by comparing the effects of undertaking the project with not doing so. This form of analysis was designed to provide a means for evaluating public works and development projects in cases where the value of them could be measured empirically. It can be traced back to DUPUIT's De la mesure de l'utilite des travaux publics (1844), but it was first applied as a technique for assessing projects under the US Flood Control Act 1936. The theoretical justification for many cost-benefit procedures was slight until HICKS published an article in 1943 on CONSUMERS' SURPLUSES. A calculation of the NET PRESENT VALUE of expected COStS and expected benefits makes it possible to use the decision rule that a project will only be undertaken if the benefits exceed the costs. The maximization of net social benefits came to be regarded as the appropriate criterion for selecting a project. The benefits and costs can be real (tangible or intangible) or pecuniary. Tangible benefits can often be equated with increased output; intangible benefits with prestige and the creation of something beautiful; and pecuniary benefits with a change in the relative remuneration of an industry or an occupation.<br /><em>See also:</em> compensation principle <br /><em>Reference</em><br />Hicks, JR. (1943) 'The four consumers' surpluses', Review of Economic Studies II: 31-41.<br /> Pearce, D.W (1983) Cost-Benefit Analysis, 2nd edn, London: Macmillan.
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