What is the social return on investment?

Social return on investment is the concept of income from investment, which is trying to encapsulate the effects that have individual actions into the world. It includes environmental effects and consequences for people who are not directly involved in action. These effects are often not easy to measure, but economists are trying to come up with methods for quantification of social return. By quantifying the cost and benefits of events, economists and politicians, they hope to encourage people and organizations to take their places in the world.

The idea of ​​social return on investment is closely related to the concept of externalities. Suppose your neighboring neighbor will decide to plant the garden. It weighs the cost of plants and how much work it advocates them against the pleasure they expect to receive. However, you also look at flowers, so it underestimates the advantages of planting the garden. If he decides to plant his planting, he can make an ineffective choice, because your pleasure could lean on the cost analysis and benefits to the positive side.

In this example is your pleasureFrom the garden with a positive externality, because it is an advantage that a person who decides does not take into account. The social effective result will only occur if you and your neighbor are coordinated to participate in the support of its gardening project. This is what the creators of politicians who use the social return of investment are trying to achieve.

In order to determine the social return of investment, the evaluators must first measure the net contribution of the event. It seeks to estimate the effects it has on factors such as the environment, health and happiness. They then use their own methods to express these effects in the amounts of the dollar.

The net contribution of the event divided by the investment needed to realize that the event brings social return on investment. The ratio is the idea of ​​the value of investment to decide how to prefer different policies. They may also estimate whether the public will be willing to financially supportRide the project.

Furthermore, policy creators must decide what to do with information about the social return on investment. They can implement different strategies to identify the parties that benefit from the action and involve them in paying at its expense. For example, if the government wants to build a new way, it may decide that it will become a charged journey. This identifies people who benefit from the new road because they are the only ones who ride it to pay a tax and collect money from them when paying for the cost of building and maintenance of the road. Such a policy will avoid billing taxpayers who do not use the road for its maintenance costs.

Not all examples are so clear. For example, the identification of people who benefit from the projects of cities beautifying is difficult to make the benefits they receive. In such cases, scientists can use surveys or data proxy, such as changes in real estate value, to estimate the benefits of the action.