Definition
- Social benefit
- Social benefits are all the benefits of a good to society: the private benefits to the buyer plus the value of all its positive externalities.
Example
Can you think of an example of social benefit?
Education raises the earnings of the person educated, a private benefit. The economist Walter McMahon finds that a well-educated population also brings better health and lower crime, an external benefit. Social benefit is the two together.
Test yourself
Can you name the three kinds of benefit on an externality diagram?