Externality: Private and Social Effects Explorer

Change the private and third-party effects of a health-related activity. Compare the incentive facing the decision-maker with the activity’s combined effect on society.

HealthEconomics.wiki original learning tool · Version 1.0

1. Choose a scenario

The values are synthetic teaching examples, not policy estimates.

Change the marginal values

Private benefit (MPB)

0150 units

External benefit (MEB)

0150 units

Private cost (MPC)

0150 units

External cost (MEC)

0150 units

2. Compare private and social results

Private net benefit0

Social net benefit0

Social benefit (MSB)0

Social cost (MSC)0

Private and social comparison

Horizontal bars compare marginal private and social benefits and costs in common illustrative units.

Private benefit

Social benefit

Private cost

Social cost

Private benefitSocial benefitPrivate costSocial cost

Method and assumptions

The explorer uses a one-unit marginal comparison. It identifies whether private and social decision signals align; it does not calculate an optimal population quantity.

MSB = MPB + MEB

MSC = MPC + MEC

Private net = MPB − MPC

Social net = MSB − MSC

Double-counting check: Do not enter an effect as “external” if it is already included in the private benefit, private cost, or another part of the analysis.

Measure	Value	Interpretation