Abstract:

Government expenditures produce both benefits and costs. In terms of unemployment insurance, especially the Federal Pandemic Unemployment Compensation program, the benefits are in terms of consumption smoothing, and the costs are expressed as moral hazard. Political parties in the US make government expenditure decisions by following their party platforms, which typically means that they are always in favor, or always against government involvement in the economy. In the process, they implicitly either concentrate just on the benefits, or just the costs. Since both benefits and costs are important, government expenditure decision-making should instead be made on the basis of Cost-Benefit Analysis. Only using this economic evaluation method would ensure that government expenditure decisions, such as on unemployment insurance, would be determined by the size of the difference between the benefits and costs, and therefore be decided on the basis of whether they are socially worthwhile or not.

Keywords:

Cost-Benefit Analysis; Government expenditures; Political parties; Federal Pandemic Unemployment Compensation; Moral hazard; Consumption smoothing.

How to Cite:

Robert J. Brent. Use Cost-Benefit Analysis and not Political Parties to Determine Government Expenditure Decisions. [ref]: vol.20.2022. available at: https://refpress.org/ref-vol20-a13/