I need to decide between two alternative proposals to reduce congestion on and near the UNC campus. Proposal 1 would ban almost all private cars between Franklin Street on the North, South Rd. on the South, Columbia St. on the West and Hillsborough Street on the East (exceptions for the disabled and other such things). The project would cost $35 million to implement, reduce congestion by 40% in the relevant area, and have a 75% chance of providing a net present benefit of $40 million. Project 2 would increase bus coverage and provide additional park and ride lots at no cost to students or employees. This project would cost $15 million, reduce congestion by 30%, and have a 50% chance of providing a net present benefit of $20 million. Please advise the University as to which project it should pursue and why. 1) Pretend that the U. S. government decides to do something proactive about climate change. It decides that it will invest $100 billion today because it believes it will result in $200 billion of benefits in 50 years, and additional $500 billion in 100 years. Using a discount rate of 0.04, is the project a Kaldor-Hicks improving one? (hint: you need to calculate net present value of the benefits. See formula on slide 6 of the "Making Decisions" lecture). What if we use a discount rate of 0.02?
2) Describe how each of the following is a threat to experimental designs in public policy and provide an example.
a. Ethical issues.
b. Repeatability.
c. Ability to manipulate variables.
d. Random assignment.