There are certain sounds or noises that give some people pleasure - the disco in full swing, or the grand opera chorus. There are other noises, equally loud, that cause displeasure - motorcycles without silencers, and jet aircraft. The traffic on many motorways passing through built-up areas causes noise levels that result

in residents' complaints. Often action is taken to reduce such noise to tolerable levels.

How can marginal analysis help a society make sensible decisions in reducing noise pollution? Noise can be measured on a decibel (dB(A)) scale. For noise levels below 68 on the scale, people seldom complain, whereas permanent ear damage can result at levels above 90 decibels if an individual is exposed to such levels over a period of time. (You might think about this if you are a rock music fan, and you might also note the earmuffs worn by ground personnel at airports.)

Suppose that the residents of a housing estate decide to investigate reducing the noise level from the motorway passing near their housing estate. The average noise level is 85 on the dB(A) scale. The options shown in the table below are available to the residents to reduce motorway noise. They may choose one or more options.

Options Marginal

change in noise

level (db(A))

Cost ($)*

1(a) Build concrete wall 2 metres high 10 160 000

1(b) Build concrete wall 3 metres high 12 190 000

1(c) Build concrete wall 4 metres high 13 230 000

1. Reduce speed limit by 10 mph and enforce new limit through

police control 3 90 000

3 Resurface Road 2 70 000

4 Rebuild the road 4 metres below its

existing level 10 2 500 000

*Total cost divided by estimated number of years of useful life.

The residents decide that they are prepared to pay, collectively, $31 000 annually for each dB(A) that noise is reduced until a level of 68 is reached, and nothing thereafter for further noise reduction.

The Local Council, conducting its own investigation, proposes that a 4metre wall be built (Option 1(c)) but that no other option be considered. Its reasoning is that the annual total cost of the 4metre wall would be $230 000 and the annual total benefit $403 000, and it points out that no other option yields such a large total benefit.

In light of all this information, assess the following questions.

1. What is the difference in monetary terms between the total benefit and the total cost of each option?
2. Which options should be excluded on the basis that total cost is higher than total benefits?
3. For which options does marginal benefit exceed marginal cost?
4. Which options should be chosen to reduce noise pollution in an economically efficient manner?
5. What is the mistake the Council made in arriving at its decision?
6. Does the economic solution to the problem mean that the residents will suffer no noise pollution?