Testing The “Art” Of Engineering Economic Decision Making

Making an economic decision involves both science and art. The “science” is comprised of the analyses applied in the process, such as discounted cash flow analysis, sensitivity analysis, or breakeven analysis. The “art” involves defining the problem, identifying relevant parameters, synthesizing information, trading off multi-attributes, and considering non-economic influences. While traditional quizzes can test whether students understand the science, testing the art is more difficult. We utilize a single question, open-ended final exam for this purpose. Students are given a problem scenario, data, and supplemental information and merely asked whether a capital investment should be pursued or not. It is expected that they will justify their decision, although there are no requirements as to how. We describe our experiences with this approach, which has been implemented for five years now.