Economics Externalities Questions Medium
Private growth refers to the increase in an individual or firm's own economic well-being or output. It is measured by factors such as personal income, profits, or market share. Private growth focuses on the benefits and costs that directly affect the individual or firm involved.
On the other hand, social growth takes into account the broader impact of economic activities on society as a whole. It considers the externalities, which are the positive or negative effects that spill over to third parties who are not directly involved in the economic transaction. These externalities can be in the form of environmental pollution, congestion, or public health issues.
The key difference between private and social growth lies in the consideration of externalities. Private growth only accounts for the benefits and costs directly experienced by the individual or firm, while social growth takes into account the external effects on society. Therefore, social growth provides a more comprehensive measure of economic well-being by considering the broader impact on all stakeholders involved.