social analysis

• Economic and social analysis is also called social cost benefit

analysis. The phrase cost benefit analysis always to refer to the
social variety.
The easiest way to understand social cost benefit analysis is
therefore to examine the difference.
• The differences have already been referred to.
• First, the inputs and outputs may be differently valued.
• The second, the benefits or costs appear resulting from the
project's operation.
• The third difference is one of timing.
Its chief aim is to determine whether the project is acceptable or
not in the context of broader social point of view. Social
analysis is different from the monetary analysis and private
commercial analysis. Social benefit cost analysis, however, is
not a technique but an approach. It provides a rational
framework for project choice using national objectives and
values.
• The national goals, social objectives and global facts
are the main guiding parameters to evaluate, to
formulate, and to implement the social project. There
may have number of variables in the parameters, one
can vary in formulating the new projects. The guiding
approach is to determine variables, in terms of
importance and worth pursuing, provided by social
cost benefit analysis.
• If cost benefit methods are being widely applied in the
public sector, the AP some years ahead may be taken
to be the MSC at the point where MSC and MSB are
equal.
 In social analysis of a project, some
questions has emerges.

• What may be the direct and indirect cost benefit

in shadow or accounting price rather than current
market price?
• What may be positive or negative effect of
project in social income distribution system?
• What may be the effect of project in total social
saving and investment?
• What may be the effect of project in
independency, employment, and social system?
• The social benefit cost analysis is important to
avoid the dichotomy between project choice and
national planning.
• For example, the projects effects may be in
employment, output, consumption, savings,
foreign exchange earning, income distribution
and other things of relevance to national
objectives.
• The purpose of social benefit cost analysis is to
see whether these consequences taken together
are desirable in the light of the objectives of
national planning.
• Social profitability analysis is mostly used for
evaluating public sector projects also where the
principal objective may not be to maximize
financial yield from the capital investment. The
chief aim of the public sector project is welfare
maximization. The objective setting of the public
project is more complex for the planner who has
to seek an appropriate compromise between the
various divergent objectives and goals of national
planning. Since the nation is a collection of
diverse groups with different interests, therefore,
the problem cannot be casually dismissed.
• The choosing between the projects is not
sufficient to know all the impacts of the
choices on all economic and social
magnitudes, since the planner must also have
some method of evaluating this total impact.
The difference between consumption of this
year and next year is a part of obtaining values
to evaluate facts.
 Rationale for SCBA
• Market Imperfections: when market imperfections
obtained, market prices do not reflect social
values. Generally, the common market
imperfections found in developing countries. It is
because of
Rationing: it means control over its price and
distribution.
Prescription of minimum wage rate: when minimum
wage rates are prescribed, the wages paid to
labour are usually more than what the wages
would be in a competitive labour market free from
such wage legislations.
Foreign exchange regulation: the official rate of
foreign exchange in most of the developing
countries is typically less than the rate that would
prevail in the absence of foreign regulation.
• Externalities: a project may have beneficial external effects.
It is for example, infrastructural facilities provide benefits to
the neighboring areas. Such benefits are considered in
SCBA though which is ignored in monetary unit. In such
analysis all costs and benefits irrespective to whom they
accrue and whether they are paid for or not are relevant.
• Taxes and subsidies: from the social point of view taxes and
subsidies ar generally regarded as transfer payments and
hence considered irrelevant.
• Concerns for savings: the division of benefits between
consumption and savings is relevant particularly in capital
scarce developing countries.
• Concerns for redistribution: a rupee of benefit going to a
poor section is considered more valuable than a rupee of
benefit going to an affluent section.
• Merit wants: goals and preferences determine by policy
makers to achieve larger interest may be reffered to as
merit wants. For example, Tiffin provided to school going
children.