So, following a discussion I had today, I have the following question.

If we use the return on investment (ROI) to describe the gain of an investment is there a similar concept not for a company but the state as whole.

The idea is the following: if a state 'invests' (is this the correct word in the sense of a state?!) in infrastructure, education, healthcare, there is a 'return' on the spent money. For example, return on infrastructure would be companies using faster internet or streets to be more efficient, making more money, in the last run paying more taxes, money spent for education would give educated people earning more money, paying more taxes; and finally, healthcare would lead to more people paying longer taxes. I think you get the idea.

Unfortunately I am no economist and do not really know where or how to look, whether such a concept exists.

Thank you and appreciate your answers.

  • $\begingroup$ There is a literature on the analysis of public policy; I am not familiar with it. However, I do see similar analysis in public discussion. The problem is figuring out the dollar values of future benefits, and what to count. Do we count just the expected increase in government taxation (which is the direct equivalent of a private sector return on investment), or the increase in GDP? How do we value things like less waiting time or longer lifespan? And if we do not have firm numbers, there is no point wasting time on the calculation. $\endgroup$ – Brian Romanchuk Apr 30 '18 at 11:21

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