The following is a quote from Gary H. Stern, President, Federal Reserve Bank of Minneapolis
2005 Annual Report:
One can hardly pick up a newspaper today, watch a television news program or read an online news service without encountering a number of stories about large, complex problems affecting part or all of the earth's population.
From disease pandemics to hunger, civil strife, educational needs, pollution and global warming, among others, there are a host of issues that vie for attention and demand resources.
However, as we all know, those resources are limited, which suggests the question: How best to allocate limited resources to return the highest benefit?
For some, this type of benefit/cost question may seem inappropriate for these sorts of problems, especially when we are talking about life-and-death issues.
How can we possibly decide that people whose lives are plagued by hunger are more or less worth helping than those who are faced with a life-threatening disease?
But the fact is, we have to decide because we can't aid every afflicted person or solve every problem-at least at the same time. We have to prioritize.
That's where economics comes in... Economics can help us answer these questions because it offers an analytical tool--benefit/cost analysis--that helps people make choices about these very important matters.
It's not perfect, but it's a tool for helping to refine choice.
College of Business
Texas A&M University-Corpus Christi
6300 Ocean Drive, Unit #5808
Texas, USA 78412
Position: Chair, Department of Decision Sciences and Economics
Office: 345 O'Connor Building