SEMAINE D'ÉTUDE SUR LE ROLE DE L’ANALYSE ECONOMETRIQUE ETC. 
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such an error could not have arisen. This error was a very regrettable 
one, for in the meantime there was an incentive to invest much 
money in projects which in fact implied a waste of scarce resources 
Thank vou. 
DORFMAN 
I greatly appreciate the comments. All of them are valid and 
some deal, of course, with problems that I, myself, encountered in 
my thinking, but due to defects in my exposition, were not set forth 
clearly in my discussion. I share with Professor ALLAIS and also 
with some of the others the feeling that it is extraordinarily difficult 
to evaluate projects without heavy reliance on prices established 
in markets. I judge that market prices are much more reliable 
indicators of social worth than any shadow prices that a group of 
experts or politicians may establish, and I think that the proposals 
I have made would not be practical without a substantial substratum 
of market prices, expecially those dealing with costs and the values 
of certain salable outputs. But there cannot be reliable free market 
prices in principle for some of the aspects of the kinds of projects 
we are here discussing. In particular, this is true of the external 
consequences of projects, as in the case of education, and of some 
convenience aspects like those relating to speed and safety, which 
come up in the design of roads. The shadow prices that I am think- 
ing of are used to fill in the gaps, so to speak, in the system of 
market prices. Take the market prices where you have them and 
be grateful. Where market prices do not exist, we need a device 
for estimating social values of types of factors and of consequences 
that are not priced on the markets. 
I think that this response deals also with the issue that Professor 
LEONTIEF has raised. I should recommend a very businesslike ap- 
proach to implementing my proposal, in effect drawing up a pro 
forma profit and loss account for the project being examined. All 
inputs used should be included on the cost side. be thev interme- 
CY | 
Dorfman - pag. 37