How Much Do Government Services Really Cost?

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Abstract
Great efforts are being made to increase productivity and to reduce costs of government services. A necessary starting point is adequate knowledge of the true cost of service. The field of residential refuse collection is investigated and empirical evidence is presented that (1) cities do not know the cost of services provided by municipal agencies; (2) city budgets substantially understate the actual cost of service. Reasons why such under- reporting occurs are examined. Because city officials perceive program costs to be lower than they really are, they are often unable to evaluate alternatives and therefore they fail to take advantage of opportunities to increase efficiency.

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