Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 39

Social Costs and Benefits are difficult to quantify because ..

! They might not be known at the time of the decision (Example: Manville and

asbestos)

! They are 'person-specific' (different decision makers weight them differently)

! They can be paralyzing if carried to extremes

Economists measure social benefits in “utils”. Few, if any, businesses have

figured out a way of actually putting this into practice.