Social Cost or Benefit

Social costs (or benefits) are the sum of internal and external costs (or benefits). Social costs (or benefits) include internal costs (or benefits) together with any

Social Discount Rate 321

other effects that may create costs (or benefits) for other members of the community. Social costs are all opportunity costs. Thus the social cost of a medical procedure will include its effects on the household and other sectors and not just the costs that are private to a hospital or clinic. Social costs do not include transfers (transfer payments) since what one gains another loses.

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