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ENGINEERING ECONOMICS APPLIED TO PUBLIC POLICY ISSUES: A CASE STUDY FOR ENGINEERING STUDENTS

Abstract

The current fiscal crisis confronting American society and the world is due in large part to the inability of a significant part of our society to fulfill their obligation to pay their home mortgages. Many solutions have been proposed. The failure of the home mortgage market is having wide-spread impact on engineering projects, particularly public works. Compounding this situation is the already inadequate funding for addressing the rebuilding of the nation’s aging infrastructure.

With the thrust to give more consideration to the social impact of engineering works and the importance of inculcating these aspects into engineering education, this paper articulates a possible case study that could incorporate economy principles and a national fiscal problem into the engineering curriculum in either an economics course or a senior capstone or ethics course. Using a subject from current events can demonstrate to students how engineering economic principles can be used to assess public policy alternatives. An ancillary aspect of this topic could be assistance in alleviating the current home-mortgage difficulties.

In essence the proposed study includes three major components:

1- A new concept of cost to be charged for home mortgages.

2- Establishment of the term of a mortgage loan by tying it to the individual’s ability to pay.

3- A proposal to permit the deduction of rent from federal income tax for the purpose of assisting in the accumulation of a down payment for the purchase of a home mortgage.

The students will be involved in evaluating this proposal through qualitative and quantitative methods in their analysis of the impact of such a policy on the current and future fiscal health of the nation.

The content of this paper will not be without controversy. But it will illustrate the potential for engineers to be more involved in public policy and decision making.

Engineering Economy, Public Policy and Engineering Education

Economy is the backbone of engineered works. It is the task and responsibility of the engineer to create (design and build) safe, functional, and efficient projects. Traditional benefit-cost analysis will determine the optimum cost, but in today’s economy it is not enough to look only at the

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Brach, P., & Zeytinci, A., & Behera, P. (2009, June), Engineering Economics Applied To Public Policy Issues Paper presented at 2009 Annual Conference & Exposition, Austin, Texas. 10.18260/1-2--5014