Social Pricing, Distribution, and the Public Sector

The present chapter deals with the third and final category of cost-benefit analysis, the ‘social’ dimension. Just as financial analysis may be thought of as a second-best substitute for economic analysis where market prices incorrectly reflect factor productivity in trade, so economic CBA may be considered as a second-best alternative to social CBA where Government wishes to compensate for inadequate global savings and income inequalities by incorporating explicit distributional objectives into micro-level planning.