What are private benifits:
These are the gains you get directly from doing something.
Example: You go to college → you get a better job → you earn more money.
What are external benifits:
These are the extra benefits others get from your actions.
Example: You go to college → you become a better citizen or start a business → society benefits too
The characteristics of private benifits:
Personal gain – The benefit goes to the person making the choice.
Direct – Easy to see and measure.
Paid for by the user – You usually pay for what you get.
Motivates action – People often act because of private benefits.
Private consumption – Only the user enjoys the benefit.
The characteristics of external benifits:
Shared with others – People nearby or society also gain.
Indirect – The benefit is not always seen right away.
Free to others – People enjoy it without paying.
Creates positive spillovers – One person’s action helps many.
Often ignored in decisions – People don’t always think about these benefits when acting.
THE END