Tuesday, September 30, 2008

problems with this methodology

Externality Accounting accounts the % of federal debt repayment over a 3 year budget, and assigns twice this as a multiplier (or divider where increasing debt) to expenditures estimated to return at least 15% or so annually.
These expenditures are limited by my knowledge base and time available to track down research that estimates ROIs. For instance, freeing up hospital beds is likely high ROI but I just don't have the time to account nursing home and homecare platform strategies.
One way to "game" this methodology is to transfer costs to provincial, municipal, and personal budgets. High ROI expenditures like public transit are municipal expenditures; I should be accounting a fraction of cash given to cities as an externality.
My only discount formula here rests upon the debt interest rate. This is a rather arbitrary way to measure societal capital depreciation/appreciation and time preference discounting, but is a problem in all of economics and finance.
Haven't considered marginal gains of investment. Canada needs $76B more of transit funding, but for instance, the Green Party's extensive environmental costing might be coming close to approaching the limit of where environmental capital is undercosted.
It is evident some of these budgets were hurried. A little more detail to Liberal and NDP infrastructure expenditures would raise their externaility totals. The Conservatives haven't forwarded a budget. The Bloc would presumably export daycare to all of Canada. There are many other law changes that I don't know how to cost in terms of money.