Why it matters
A financial ledger may not capture all the consequences of a decision. Social appraisal asks whether impacts on others belong in the comparison as well.
A worked example
An illustrative delivery costs the firm £8 and creates £2 of external damage. The social cost is £10 if those measures capture all relevant costs.
Illustrative example · simplified assumptionsA common mistake
Adding the same damage twice under different labels.
Where the idea needs care
External damages can be uncertain and difficult to value. Do not double-count costs already included privately.
Apply the idea
Explain this concept using a different example from your spending, work, business or a policy debate. State what stays fixed and what could change the result.
Sources and further study
Examples and explanations by Alibomics. Numeric illustrations are not current market quotations.