Social benefit is the comprehensive measure of all positive value generated by an economic activity. It represents the total wellbeing created, combining both the private gains captured by economic actors and the broader societal gains that extend beyond market transactions.
The concept of social benefit comprises two distinct components. The first is Revenue, which represents the direct financial income obtained from the sale of product outputs. This is the market value that accrues to the economic actor conducting the activity, reflecting the private returns from economic exchange.
The second component consists of external benefits, which are positive Externalities that enhance human wellbeing for other economic actors or society at large without being reflected in market prices. These external Benefits represent value created by an activity that spills over to benefit others beyond the direct transaction. Examples include improved air quality from emission reductions that benefits public health, enhanced biodiversity from sustainable land management practices, or knowledge spillovers from research activities that advance collective understanding.
Understanding social benefit is fundamental to comprehensive sustainability assessment and cost-benefit analysis. Whilst conventional economic accounting captures revenue, it fails to recognise the external benefits that contribute significantly to overall human wellbeing. By acknowledging the full scope of social benefit, decision-makers can evaluate economic activities more holistically, accounting for both the value captured in market transactions and the broader positive impacts on society and the environment. This perspective supports more informed policy development and business decisions that recognise the total contribution of activities to sustainable development.
