In Sunday's NYT "Economic Views" column, I was stunned to read, fairly early in the piece, this error of basic economics:
"Every profession produces both private returns — the fruits of labor that a person enjoys — and social returns — those that society enjoys. If I set up a shop on Etsy selling photographs, my private returns may be defined as the revenue I generate. The social returns are the pleasure that my photographs provide to my customers."
People, private returns are the returns enjoyed by market participants both producers AND consumers. Consumer surplus is not a "social return". It flows to the buyer alone.
Social returns are returns that accrue to people outside the market. People other than the buyers and sellers.
Let's try an example of our own.
If I paint people's houses, the private returns are the producer surplus (which is not my revenue) I enjoy AND the consumer surplus my customers enjoy. The social returns could be (A) zero, (B) positive because the newly painted house raises my neighbors' property values, or (C) negative because my customer had the house painted purple and it is causing disutility for the neighbors.
If that quote above was given as an answer to a question about the difference between private and social benefits in my principles class, it would fail.
The worst part of the whole thing is that, to introduce the offending quote, the columnist says, "As an economist, I look at it this way".