200 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - - 
construction cost is only a partial offset; it is much easier 
generally to make a plausible guess at an allowable construction 
cost than to guess at an efficient output level. Another advant- 
age is that there is some obscurity about the proper costs to 
minimize in the cost minimization approach. The most plaus- 
ible choice is total cost — the cost used in the denominator 
of a conventional benefit-cost ratio — but this kind of cost 
does not constitute a drain on any definable scarce resource, 
it is an amalgam of construction costs in the near future and 
operating costs extending through the life of the project. The 
present value of the monetary net benefit stream has much 
more appeal as the dimension of performance to be singled 
out for special treatment. 
The net benefit maximization approach also leads to shadow 
prices, which may be even more usefully interpretable than 
the shadow prices yielded by cost minimization. One of the 
shadow prices will pertain to the construction cost constraint. 
This price should surely be approximately the same for all 
projects that are to be initiated in any brief time period, thus 
facilitating inter-project comparisons and allocations. 
My entire discussion has concentrated on the problem of 
incommensurable benefits. There are also often incommensur- 
able costs, and these can be handled in precisely the same way: 
by establishing target levels and revising them in the light of 
trial results. A few special cases of costs not measured ade- 
quately in dollar terms deserve explicit mention. These are 
all cases in which, perversely, a dollar is not worth a dollar. 
Foreign exchange drain is an obvious instance: a country 
may well be willing to forego more than a dollar in discounted 
net benefits to save a dollar in foreign exchange. Inflationary 
budgetary impact is another case. Most public investments 
require heavy expenditures in some pattern extending over a 
number of years. Anticipated budgetary tightness or inflation- 
ary pressure may well be substantially different in some years 
in the near future than in others. In such a case. total con- 
3] 
Dorfman - pag. 14