It has long been agreed, that the economic value of unemployed labor is less than its wage rate. Shadow-pricing of such labor is common practice in economic analysis. The usual outcome of such shadow-pricing is that the economic rate of return of a project is enhanced. But this is not always the...

What are the conclusions that we have to draw from the foregoing discussion? We must conclude that the prevailing practice of evaluating benefits and costs in terms of present costs and prices is not only likely to lead to an under-statement of actual costs, but also may lead to gross...