A Method for Estimating “Money-Free” Social Benefit-Cost Ratios

Abstract Information: I introduce “parity-adjusted returns”, a type of social benefit-cost ratio that can be estimated without monetizing benefits or costs. Many social investors and philanthropic funders depend on social benefit-cost ratios when making resource-allocation decisions for the public good. Because they allocate monetary resources, investors and funders must contend with the considerable challenge of “monetizing” (attaching monetary value to) benefits and harm that are not monetary in nature. It may be possible to avoid monetization altogether by applying a recent idea from philosophy called parity. I use the fundamental impact value equation (FIVE), which I introduced at last year’s AEA conference, to demonstrate how. The method I describe may be controversial, and I encourage feedback from participants. I also provide access to a draft paper that outlines the underlying concepts and includes worked examples.