Question

“Social Cost-Benefit Analysis (SCBA) is an assessment method used to determine the economic prudence of a project, programme, or policy to all relevant members of society”. Critically examine this statement.

Answer 1

Social Cost-Benefit Analysis

Social cost Benefit analysis is a decision support mechanism which aids in measuring and weighing the various effects of a project or a policy.

Criticaly explained:

Social cost Benefit analysis is also known as an economic analysis which is used to assess the impact of investment business projects on the society as a whole. This method enables us to compare the project costs with a broad range of factors such as travel, time, saving costs etc.,This method throws light on who will bear the cost of a project and who will enjoy the benefits of the project. This method does not cover the financial effects alone but also the societal effects such as the pollution, environment, safety, travel times, spatial quality, health, indirect market factors and legal aspects etc., The main objective of the social cost benefit analysis is to insert a price for as many aspects as possible so as to weight the afore-mentioned effects in a balanced manner. These prices reflect the value that a society attaches to the effects which enables the decision maker to form an idea about the net social welfare of a project.