IDEAS home Printed from https://ideas.repec.org/p/qed/dpaper/4591.html
   My bibliography  Save this paper

Social Capital and the Social Evaluation of Investments

Author

Listed:
  • Hatice Jenkins

    (Department of Banking and Finance Eastern Mediterranean University, North Cyprus)

  • Glenn P. Jenkins

    (Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada)

Abstract

One outcome of the existence of social capital in a community is that individuals will take into consideration the welfare of other members of the community. If an investment project is undertaken that causes the poorer members of society to increase their consumption of goods and services to improve the satisfaction of their basic needs, then other members of the community who are not directly affected by the project may also experience an increase in the level of their economic welfare. This approach takes into consideration both the change in the economic welfare of the recipients of the assistance the enhances the satisfaction of basic needs in the community, and also the tastes, preferences, and economic welfare of the rest of the community. These basic needs externality can be created by investments because the project lowers the price of a good or service used to satisfy their basic needs, or by raising the incomes of the poor groups so that they now will buy more of the goods that are used to satisfy their basic needs. This paper develops a theoretical framework for the evaluation of the basic need’s externality created by the investment. It then applies this theoretical framework to the case of a project that proposes to expand the water supply in the south part of the city of Manila. We find that these externalities can be quite important. In this particular case a conservative evaluation of the basic need’s externality leads to a value that is over 4 times as large as the financial shortfall of the project.

Suggested Citation

  • Hatice Jenkins & Glenn P. Jenkins, 2021. "Social Capital and the Social Evaluation of Investments," Development Discussion Papers 2002-14, JDI Executive Programs.
  • Handle: RePEc:qed:dpaper:4591
    as

    Download full text from publisher

    File URL: http://cri-world.com/publications/qed_dp_4591.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jenkins, G.P., 1998. "Evaluation of Stakeholder Impacts in Cost-Benefit Analysis," Papers 631, Harvard - Institute for International Development.
    2. Woolcock, Michael & Narayan, Deepa, 2000. "Social Capital: Implications for Development Theory, Research, and Policy," The World Bank Research Observer, World Bank, vol. 15(2), pages 225-249, August.
    3. Harberger, Arnold C, 1984. "Basic Needs versus Distributional Weights in Social Cost-Benefit Analysis," Economic Development and Cultural Change, University of Chicago Press, vol. 32(3), pages 455-474, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Glenn P. Jenkins & Mikhail Miklyaev & Owotomiwa Christiana Olubamiro & Siamand Hesami, 2021. "Cost-Benefit Analysis of Tax Administration Reforms in Finland," Development Discussion Papers 2021-11, JDI Executive Programs.
    2. Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 7 (Principles Underlying The Economic Analysis of Projects)," Development Discussion Papers 2011-07, JDI Executive Programs.
    3. John B. Loomis, 2013. "Incorporating distributional issues into benefit–cost analysis: why, how, and two empirical examples using non-market valuation," Chapters, in: Scott O. Farrow & Richard Zerbe, Jr. (ed.), Principles and Standards for Benefit–Cost Analysis, chapter 9, pages 294-316, Edward Elgar Publishing.
    4. Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 14 (The Shadow Price of Government Funds, Distributional Weights, and Basic Needs Externalitiess)," Development Discussion Papers 2011-14, JDI Executive Programs.
    5. Mahto, Raj V. & Belousova, Olga & Ahluwalia, Saurabh, 2020. "Abundance – A new window on how disruptive innovation occurs," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    6. Giuseppina Guagnano & Elisabetta Santarelli & Isabella Santini, 2016. "Can Social Capital Affect Subjective Poverty in Europe? An Empirical Analysis Based on a Generalized Ordered Logit Model," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(2), pages 881-907, September.
    7. Hong Sun & Valentina Hartarska & Lezhu Zhang & Denis Nadolnyak, 2018. "The Influence of Social Capital on Farm Household’s Borrowing Behavior in Rural China," Sustainability, MDPI, vol. 10(12), pages 1-20, November.
    8. Blocker, Christopher P. & Ruth, Julie A. & Sridharan, Srinivas & Beckwith, Colin & Ekici, Ahmet & Goudie-Hutton, Martina & Rosa, José Antonio & Saatcioglu, Bige & Talukdar, Debabrata & Trujillo, Carlo, 2013. "Understanding poverty and promoting poverty alleviation through transformative consumer research," Journal of Business Research, Elsevier, vol. 66(8), pages 1195-1202.
    9. Grootaert, Christiaan, 1999. "Social capital, houshold welfare, and poverty in Indonesia," Policy Research Working Paper Series 2148, The World Bank.
    10. Dufhues, Thomas & Buchenrieder, Gertrud & Munkung, Nuchanata, 2012. "Individual social capital and access to formal credit in Thailand," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 123401, International Association of Agricultural Economists.
    11. Bicak, Hasan Ali & Jenkins, Glenn P. & Ozdemirag, Ali, 2002. "Water flow risks and stakeholder impacts on the choice of a dam site," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(2), pages 1-21.
    12. Zhan, Shaohua, 2015. "From Privatization to Deindustrialization: Implications of Chinese Rural Industry and the Ownership Debate Revisited," World Development, Elsevier, vol. 74(C), pages 108-122.
    13. Aparna Kumari & Tim G. Frazier, 2021. "Evaluating social capital in emergency and disaster management and hazards plans," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 109(1), pages 949-973, October.
    14. Jan Fagerberg & Maryann Feldman & Martin Srholec, 2011. "Technological Dynamics and Social Capability: Comparing U.S. States and European Nations," Working Papers on Innovation Studies 20111114, Centre for Technology, Innovation and Culture, University of Oslo.
    15. Sandra Viviana Polanía Reyes, 2005. "Capital Social E Ingreso De Los Hogares Del Sector Urbano En Colombia," Documentos CEDE 2099, Universidad de los Andes, Facultad de Economía, CEDE.
    16. Desai, Raj M. & Olofsgård, Anders, 2019. "Can the poor organize? Public goods and self-help groups in rural India," World Development, Elsevier, vol. 121(C), pages 33-52.
    17. German, Laura & Tay, Hailemichael & Charamila, Sarah & Tolera, Tesema & Tanui, Joseph, 2006. "The many meanings of collective action: lessons on enhancing gender inclusion and equity in watershed management," CAPRi working papers 52, International Food Policy Research Institute (IFPRI).
    18. Ghazala Mansuri, 2004. "Community-Based and -Driven Development: A Critical Review," The World Bank Research Observer, World Bank, vol. 19(1), pages 1-39.
    19. Seemi Waheed, 2001. "Analysis of Issues on Micro Credit—The Case of Two Villages in Punjab," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(4), pages 723-750.
    20. Yasutaka Ueda & Rajib Shaw, 2016. "Managing and bridging communities in temporary housing: case of the Great East Japan Earthquake and Tsunami in Kesennuma City, Japan," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 80(1), pages 567-587, January.

    More about this item

    Keywords

    social capital; basic needs; economic externalities; investment appraisal;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:dpaper:4591. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Babcock (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.