Cost-Benefit analysis question.

[alnorth]

Originally Posted by Rain Man

Frankly, I think the best way is not to add up the whole career because it's a pain in the neck. You're just looking at differentials, so you should assume that the corporate drone job is zero and freeze it at that, then calculate the relative costs and benefits of the Peace Corps gig and see if it adds to more than zero or less than zero. That's the way they worded the problem.

I disagree, since there is not an interest rate or any discounting that has to be done, the math is trivial. Also, it is more intuitive and easy to understand to say "if you do this, you'll get this much money, and if you do that, you'll get that much money". Its how we usually evaluate economic decisions. Classifying benefits vs costs works too, but its a bit more needlessly esoteric.