In a recent article, Mishan (1967) challenged the validity of the discounting procedure set forth by Marglin (1963) and Feldstein (1964) for evaluating the time streams of benefits and costs generated by public investments. As an alternative, he proposed that the rate of return on private investment, p, be used for discounting purposes. Since the algorithm derived by Marglin and Feldstein is extremely complex and requires knowledge of the social rate of time preference, r (which may be impossible to determine empirically), Mishan's scheme would vastly simplify the task facing benefit-cost analysts. Unfortunately, however, the validity of this procedure rests upon two assertions which can be shown to be false: (1) The social opportunity cost of transferring funds from the private to the public sector is independent of the source of such funds, that is, private consumption or private investment. (2) Given the fact that the opportunity cost per dollar of public capital is p/r, the proper investment criterion for public investment is that the present discounted value, using p as the discount factor, of benefits minus costs be nonnegative. Underlying the first proposition is the logic that displaced consumption expenditure could have been used for private investment purposes and vice versa. Since private individuals are indifferent, at the margin, between consumption and investment, the transfer of funds to the public sector is alleged to entail the same social cost per dollar whatever the source of such funds. This line of reasoning leads to the odd result that the social worth of one dollar of present consumption is greater than one dollar of present consumption. This follows because, under the assumed conditions (p > r, no reinvestment of the proceeds of private investment), the present social worth of a dollar of private investment is greater than one dollarexactly .(p/r) dollars. If a reduction in private consumption is to entail the same social cost per dollar as a reduction in private investment, each dollar of reduced private consumption must have a present social worth