Last edited 27 Nov 2020

Social cost

The Green Book, Central Government Guidance On Appraisal And Evaluation, Published by HM Treasury in 2020, suggests: ‘Social Costs are the costs to society , the total of which in the Green Book is the sum of costs accruing to society and any benefits accruing to the public sector.’

It suggests: 'Social Cost Benefit Analysis quantifies in monetary terms the effects on UK social welfare. Costs to society are given a negative value and benefits to society a positive value. Costs to the public sector are counted as a social welfare cost. It generates measure of social value. When combined with an appropriate public sector cost measure a BCR is produced which provides a social unit cost measure.

And: 'Social Cost-Effectiveness Analysis compares the costs of alternative ways of producing the same or similar outputs, it produces a unit cost measure.'

The 2018 Green Book, suggested that social cost is: ‘…the total cost to society of an economic activity – the sum of the opportunity costs of the resources used by the agent carrying out the activity, plus any additional costs imposed on society from the activity (external costs).’

It suggested that social cost benefit analysis: '...quantifies in monetary terms all effects on UK social welfare. Costs to society are given a negative value and benefits to society a positive value. Costs to the public sector are counted as a social welfare cost.'

And social cost-effectiveness analysis: '...compares the costs of alternative ways of producing the same or similar outputs.'

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