Policy analysis Assignment Example | Topics and Well Written Essays - 500 words - 1

Policy analysis - Assignment Example For instance, calculation of the costs and benefits that are valued in executing a water project today is bound to change in the coming years. Consumer price index is the absolute measure of price levels of consumer products whose calculation is based on the product type, region, and buying power of consumers. The price index is usually a fixed value that is set by a regulatory body, for instance, the department of labor in US. The value is based on a fixed weight price of goods that consumers purchase in every month (Adler & Posner, 2006). However, inflation is the measure of the increase in price levels in the economy in average terms. Its value is dependent on market forces since most economies operate under a free market system where forces of demand and supply play a crucial role. Therefore, the main reason why CPI overstates the value of inflation is because CPIs determination is done by an authorized body while inflation rate is determined by the market forces. The CPI figure is based on predictable parameters, and it is fixed for a period while inflationary changes are unpredictable. Indeed, economic value of life is dependent greatly on how one maximizes on the potential loss within the earning system. The value of lost earnings affects individual’s capacity for meeting certain life objectives due to eminent constraints. As noted by various economists, lost time, leads to lost earnings that in turn expose one to diminishing life value. Therefore, the assertion that economic value of life should be based on the present value of lost earnings instead of current earnings is real. Statistical reports from various empirical studies also affirm the fact that lost earnings exposes individuals to serious risks. Lost time has immense negative economic connotations that can be mitigated through effective measures. Willingness-to-pay measures that are based on