Innovation and Economic Value: A Prospective Benefit-Cost Analysis of the Fab Bhutan Challenge

Benefit-Cost Ratio of an investment in an innovation A benefit-cost ratio indicates the return per dollar invested: where Nit is the number of people reached by challenge solution i in year t, Bit is the estimated benefits per person reached (net 33 Journal of Bhutan Studies, Vol.47, Winter 2022 of operation costs – the recurrent spending and capital investment that are required to make the soluti. [...] Mathematically, it is the rate SRORi that equalizes the two sides of the equation below, setting the value of discounted costs equal to the value of discount benefits: An investment is deemed socially beneficially if its social rate of return is greater than some threshold. [...] Extension to a portfolio of innovations To calculate the return of FBC, the returns on the individual challenges must be summed and set against the innovation costs of not only the individual challenge solutions, but the FBC as a whole. [...] The microdata of the 2022 Labor Force Survey (LFS) was used to calculate the size and status quo income of the occupational and geographic groups that would benefit from the solutions. [...] 44 Benefit-Cost Analysis of the Fab Bhutan Challenge Bringing together the international participants and giving them the space and resources to design solutions was an essential part of the innovation process.