Jules Dupuit and benefit-cost analysis: Making past to be the present

Abstract

The paper reviews the enduring contributions of Jules Dupuit (1804–1866), Chief Engineer for the City of Paris and later Inspector-general of the Corps des Pont et Chaussees, on benefit-cost analysis, and his development of aggregate demand function for the identification of benefit, and consumer and producer surpluses as measures of utility.The paper first describes briefly what Jules Dupuit saw: the transport sector in Europe in the mid-1800s. It then presents and discusses what he said On the Measurement of the Utility of Public Works, and On Tolls and Transport Charges, his seminal works published in 1844 and 1894. Dupuit covers a wide array of topics: Identification of benefits; Consumer surplus (termed “relative utility”); Price discrimination; Product quality and Method of manufacture; Efficiency and distribution of benefits; and Role of the State in the railways.Dupuit's guiding words for these complicated issues is concise: “The only utility is that which people are willing to pay for”. This is illustrated with a graphical and numerical example how Dupuit's benefit-cost analysis might be applied today.The paper concludes with enumeration of Jules Dupuit's lasting contributions to the economic analysis in the transport sector.