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Importance of Social Cost Benefit Analysis

Social cost benefit analysis is a process in which the social impact of a project or a policy is assessed and evaluated by the government before approving a project contract. Read more...

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Education Market. Signup Now! Edupreneur.co/Become-Entrepreneur Social cost benefit analysis is a part of calculating the merits of a project or a government policy. As the name suggests, social cost-benefit analysis of anything is associated with its social impact. This means that how a project or a policy will affect people is analyzed. Only after calculating the opportunity cost of a project, it is approved. The scope of social cost benefits can be applied to public investment and also to private investment. In case of public investment, it plays a major role in the economic development of a developing country. And, in case of private investments social cost benefit analysis is important as investments are to be sanctioned and are monitored by the government. There are two aspects of calculating the cost benefit analysis of any project. One is the private cost-benefit analysis and the other is social cost-benefit analysis. Though, social cost-benefit analysis is usually undertaken by the government. Social cost is often in contrast with private cost. Major differences between social cost benefit analysis and private cost benefit analysis are as follows: 1. In social cost benefit analysis, not only profit but also other effects like how will it affect life of others are considered. Whereas, in private cost benefit analysis, the focus of the analysis is on maximizing profits. 2. For calculating social cost benefit, market prices for the factors to be considered cannot exist. Therefore, market price is not the main factor taken into consideration while calculating social cost benefit. Whereas, for private cost benefit analysis

market price forms the base of the analysis and the key factor that determines if a project is viable. Social Cost = Negative Impact Social Benefit = Positive Impact Social cost benefit analysis has been introduced to develop systematic ways of analyzing cost and benefits of factors which do not have market prices, like effect on environment and traffic. Social cost-benefit calculates non-monetized benefits/ losses. It is normally used for large fund projects like constructing a dam, a road. Such projects have higher social cost-benefits and also affects the price level to an extent. Example: If a bridge is to be constructed then how much will it benefit the people who live in that particular area, is to be analyzed. Therefore, how many people are willing to use the bridge, how much traffic will be reduced and what is the increase in cost of traveling, will have to be assessed as a whole to come to a conclusion. Suppose, if people are not willing to use the bridge if the cost of traveling from the bridge is $5 and if $7 has to be charged per vehicle to make this project feasible, then the government may consider dropping the project out. On the other hand, if people are willing to travel using the bridge, being indifferent to the toll price-difference of $2, and the traffic is reduced by a good amount, then the government will sanction the project. Therefore, it is beneficial to take up a project if its total benefits (B) are more than its total costs (C) . It can be put up as, a project should be undertaken if, B/C > 1 or even when B=C. That is, when the cost-benefit ratio exceeds unity or when benefit derived and the cost of the project is equal. Before sanctioning a project, cost and benefit of alternative projects are assessed too. For example, the opportunity cost of setting up a hospital instead of a school. Importance of Social Cost Benefit Analysis The importance of social cost benefit analysis has been explained with the help of the following factors that affect the general masses as a whole. Market Failure Market failure when a big project is not affecting everyone but only a few. A private firm would only look at profitability and related market prices to take up a deal but the government has to look at other factors. To determine the social cost in case of market failure and when market prices are unable to define them. These social costs are known as shadow prices. Savings & Investment Impact of the project on general savings and investment level. A project that induces more savings are investment in an economy and not the other way round. Distribution & Redistribution of Income The project should not lead to accumulating income in the hands of a few but, it should equally distribute the income. Employment and Standard of Living

How a project affects employment and standard of living will be taken into account as well. The deal should lead to increase in employment and standard of living. Externalities Externalities are impacts of a project which can be both harmful and beneficial. Therefore, both the effects are to be assessed before sanctioning a deal. Positiveexternalities could be in the form improvement in technology and negativeexternalities could be in the form of increase in pollution and destruction of ecology. Taxes and Subsidies In a general cost benefit calculation, taxes and subsidies are considered as expenses and income respectively. Though in case of social-cost benefit analysis, taxes and subsidies are considered as transfer payments. Social cost benefit analysis enables the government to take up new developments which will benefit everyone and not just a few. Also, it helps in bringing about an overall development in an economy and can help make decisions that will increase employment, investments, saving and consumption, thus, improving the economic activities in an economy.

Cost Benefit Analysis


Cost benefit analysis is a systematic study of the costs of a project and the benefits derived from its completion. A project is only worth undertaking, when the benefits outweigh the cast and the project is adjudged to be profitable. A cost benefit analysis can be applied to the simplest of decisions as well, but it is essential to take all tangible as well as economic (intangible) costs (like time utilized, opportunity cost, etc) into account as well. The articles given below, through more light on the process of a cost benefit analysis. Importance of Social Cost Benefit Analysis Social cost benefit analysis is a process in which the social impact of a project or a policy is assessed and evaluated by the government before approving a project contract. Read more... Cost Benefit Analysis Example What is cost benefit analysis? How does it play a key role in business management and development? If these are the questions on your mind, then the cost benefit analysis example and the detailed explanation mentioned in this article will be useful for you. So, keep reading to know more...

Pricing
One of the four P's which complete the P's of the concept of marketing, Pricing refers to the revenue generating component. It is the process of allotting prices to sales and purchase orders, depending on various external and internal factors. For more information on pricing, read on. Ads by Google

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Zendesk Delivers the Tools So You Can Deliver the Smiles! www.zendesk.com Break Even Analysis Template Break even analysis template is used by organizations to know the time period it will

take them to recover the initial cost of setting up the business. Let us know more about it. Price Gouging A brief elaboration on price gouging has been provided in the following paragraphs. To know more, read on... Pricing Analyst This article aims at explaining to you the pricing analyst job description along with the pricing analyst salary. So, continue reading to know more... Skimming Pricing Strategy Pretty interesting among various pricing strategies used by different marketers is market skimming. Let's get to know it a little closely. Price Discrimination Policy of Business Firms Price discrimination is an important strategy to enhance the revenue as well as the market shares. There are different form of price discrimination here the firm charge differently for same product and services to different customers. Break Even Analysis Formulas Break Even Analysis is used in many subjects right from economics to finance to costing. Here's more about Break Even Analysis Formulas. P for Pricing !! Today's market has been under various types of war. And Price War is one of them. Pricing is no more remained negligible. Pricing is an ultimate foundation to get competitive advantage in market

Technical Analysis
Technical analysis involves the use of both simple and complex mathematical and statistical concepts in determining the viability of an investment. While many academics feel that technical analysis and charting is useless, many brokers, money managers, and traders have begun using such analysis exclusively or in conjunction with fundamental analysis. Some of the most common technical indicators for stocks and other investment vehicles include Fibonacci numbers, moving average crossover divergence (MACD), Williams %R, stochastic oscillators, momentum, directional movement, on-balance volume (OBV), relative strength index (RSI), and moving averages. Below are links to information about technical analysis. Chartered Market Technician Right from graph paper and pencil to the use of high tech computers, chartered market technician jobs have seen tremendous growth in the recent years. Divulged below is some information about the same... Technical Analysis of Stock Trends This article on technical analysis of stock trends will help you to know how effective analysis of stocks, from price movement angle, can help in determining future prices. So continue reading, to know more about technical analysis of stocks.

Business Report

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Business Report Topics If you are a commerce, business administration or MBA student, learning how to write an effective business report can be of great help in your professional career. Numerous business report writing topics mentioned in this article will help you practice this form of business writing more efficiently. Business Report Example The following article, describes the process which is used to write a business report. Example of such a report has also been included. Read on... Formal Report A formal report is complied to report and present facts to a group of people or to one's superiors. In the following article, such a report, its format and an example have been discussed. To know more, read on... Formal Report Outline Whenever you carry out an project, you are expected to write a formal report. If you don't know the formal report outline, you won't be able to write it. So, here we give you details of how to write a formal report. Read on... Formal Report Writing Formal report writing is a task that requires good presentation and analytical skills as it is a very important task. To learn about formal report writing style, read the following article on formal report writing... Formal Report Example Looking for information on how to write a formal report? Here's an article on formal report example which will give you the formal report outline. Formal Report Template Here's an article on the formal report template, which will give you a good idea on how to make a formal report. Read on, to get acquainted with how to write a proper formal report.

Formal Report Format Have to write a formal report for a project but not sure how to format it? If so, then check out the formal report format given in this article for your help. How to Write a Formal Report Formal report is written to document and present any result in a formal way. If you are wondering how to write a formal report, read on the following article. Business Report Writing Learn the skills of business report writing in this article. Read on and help yourself. Business Report Template Looking for a business report template? Here's an article on how to write a business report followed by a business report example. Sales Report Template There are many different statements and documents, with financial figures, that have to be submitted by a salesperson to his superior. A sales report template often comes in handy in such a scenario. May it be a general store sales employee or an agent selling a diamond ring, every employee of the sales department has to give in some concrete figure to the company... Business Financial Reporting Business financial reporting is a very important concept that provides all business information related to finances. Its main element is business report writing which consists of confidential documents with all the fiscal data of the company. To know more on writing business reports, just read on... Business Report Format Business report writing, requires one to adhere to a particular format, so that such reports are organized and hence, are less time-consuming for a busy manager. To know what is the perfect business report format, read on... Writing Business Reports Business report writing needs to be taken seriously as a business report is considered to be a professional document which may have an impact on the goodwill of an organization. Writing business reports professionally requires a diplomatic mindset and an experienced hand. Let us discuss more on how to write a business report. How to Write a Business Report Business report writing is used by professionals to write business research, forecasting and business related issues. This article will help you understand how to write a business report.

Decision Making
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The Role of Emotions in your Decision-making Don't you think, it is very easy to convince someone when he or she is in a very good mood? If your answer is, "YES!", then have you ever thought what role emotions play in your decision-making process? Scroll down to get details. Steps to Effective Decision Making The course of life changes, based on the decisions that we make in life. And for our life to move in the right direction, we need to make the right decisions. Do you have troubles taking effective decisions? Then this article on steps to effective decision making will help you learn and understand the art of taking decisions. Read on... Group Decision-Making Techniques A good decision can always prevent you from making mistakes in any kind of organization. It also helps to analyze and stabilize the situation. Over here, learn some group decision-making techniques, and become a proud owner of your firm. Decision Making Process What constitutes a decision-making process? Why is it so important to follow this process? Scroll down to know answers to these questions. Importance of Decision Making What sets great managers apart from mediocre ones is their decision-making ability. The importance of decision making in management or any other field of human endeavor can never be underestimated. In this article I'll discuss the importance of decision making in personal and professional life. 6 Steps to Decision-making Process All human beings are faced with certain situations in their everyday life, where they need to take important decisions. However, decisions that are made without any planning have a risk of leading to failure. To avoid such problems, it is necessary to take decisions in an organized way, which can be done by following the 6 steps to decisionmaking process... 8 Steps to Decision-making Process When important decisions are made in the span of a moment without involving a thoughtful process, there are high chances of it turning out to be a failure. It is very important to contemplate carefully and systematically before taking any crucial decision. The 8 steps to decision-making process shows how a decision can be made in a systematic way... Types of Decision Making Some decisions are made quickly while there are others that involve a lot of deliberation. Then there are those that can't be altered as compared to those that can be revoked. Read on to know about the different types of decision making... Proper Decisions If there is something we can do to harm ourselves first of all, that is to make no decisions when it comes to accepting the truth of God. The continual delay in spite of clear

evidence is something that God Himself does not approve. See more. Advantages and Disadvantages of Group Decisions Decision-making is a tricky business, especially when it comes to large groups. Here are some advantages and disadvantages of group decisions. Have a look... Psychosocial Evaluation in Decision Making Process Are you another Hamlet in the decision-making process? According to psychosocial evaluation, human mind is blocked at "to be or not to be?" We have many critical questions in this age of post modernism. This article will help you in decision making process from the viewpoint presented in Shakespeare's Hamlet. Life Choices - Facing Difficult Decisions How do you cope with the stress of making a difficult decision? Desire and Decision-Making We owe it to ourselves to stop insisting that some of our desires are real and others are not. For, when we look deeper, we find something still more disturbing. LIFESTYLE CHOICE: The choices people make! There are many choices that people make in this world. Understanding them and persevering in them, is what life should be about! But does it really happen that way! Smart - DECISION D - Destiny, E - Examine, C - Convince, I - Instinct, S-Stick, I - In time, O - Others, N- No doubt

Business Financing
Business Financing is an entity putting money into a business in order to support its start up or expansion or any other purpose. There are several ways to go about doing it. The articles below will help you at knowing all about it. What is the Difference Between a Public and Private Corporation Public and private companies are the two main types of companies which we all are aware of. In this article, we will try to understand what is the difference between a public and private corporation. How to Raise Money for a Business There are many potential entrepreneurs out there, wondering how to raise money for a business venture. This article will give you some answers, and try to provide you with solutions to this problem. Comprehensive Income Don't know what is comprehensive income and looking for more information on it? Then you have come to the right place, here we give you some useful information on its definition, its formula and an example of comprehensive income statement. Read on... Convertible Debentures What are convertible debentures? Debentures is a type of loan that a company takes from the debenture holders. There are various types of debentures that are categorized

depending upon the type of loan repayment. Convertible debenture is one of those in which the amount of debentures is fully or partially converted into equity shares. Here's more about the same. Acid Test Ratio Formula Acid test ratio is calculated by companies to determine how much liquid assets they have to settle their current liabilities. Read on to know the acid test ratio formula as well as ways to interpret it, followed by the drawbacks of the same. Tangible Net Worth Tangible net worth is basically the value of the tangible assets of the business. Read on for what is tangible net worth and how to calculate tangible net worth. Operating Income Generation of revenue is represented in different statements and figures by the finance and accounts department. Operating income is one such figure that represents the revenue of a firm. To know more about operating income, read on... Cash Advance Lenders Business and payday cash advance lenders help by providing money to cash strapped borrowers. Business Bottom Line The business bottom line is probably the most important thing that investors keep their eyes upon. Let us know more about bottom line in business. Commercial Financing for Business Financing a business, regardless of whether it is in the start up phase or in the growth phase, can be a daunting task. This article aims to help entrepreneurs explore the various avenues of commercial financing... Bootstrap Financing Every entrepreneur needs finance to start a business. Bootstrap financing is a popular way to raise capital, as it comes with minimal liability. U.S. GAAP - Generally Accepted Accounting Principles Generally Accepted Accounting Principles or U.S. GAAP is the common standard platform of guidelines of accounting rules for financial accounting in the preparation of financial statements. Although quite flexible in guidelines, this framework is based upon certain constraints, principles to address specific necessities. Let us learn... Creative Business Financing Have a business and need some finance? Need money to start a business? Here are some creative business financing ideas for you...