Full text: Study week on the econometric approach to development planning

of committees or of local administrators of public aid on what you 
have and how vou should spend the income: 
The two cases that I had in mind in introducing that motiva- 
tion were public housing and education. In both cases it is ge- 
nerally felt that there are very important external economies of 
consumption so that not only does the public want to provide those 
services to the lower income groups, but also it is the public will 
that the beneficiaries of such subsidies spend them on the goods 
that they are intended for and on no others. This is candidly a 
form of sumptuary legislation in which the community is consciously 
and explicitly substituting its judgment for the preferences of some 
of its consumers because it is felt that the community as a whole 
will benefit from the types of consumption that are being subsidized 
[ should first confess that I have to apologize for having read 
only one half of the paper. However from the beautiful exposition 
that Mr. DorFMAN gave, I understood that his discussion was con- 
cerned with evaluating specific projects, one by one, so to say, 
or three at a time, and he described TINBERGEN’S proposal of an 
iterative procedure by which to get the optimizing quantities and 
their shadow prices in line. My question is, how does the rate of 
return itself, or if a different rate is applied to different parts of the 
future, how does the sequence of rates of return applicable to indi- 
vidual one-year periods in the future get determined? Is this also 
part of the iterative process of dialogue between the economic plan- 
ner and the political decision maker? If so, is that problem not of 
a higher order of complexity in the data requirements in that really 
all relevant projects, including those likely to be forthcoming from 
the private sector of the economy, enter also? 
Dorfman - pag. 2;

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