What Are Examples of Spillover Benefits?

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Examples of spillover benefits include flood control dams, educated societies and medical and scientific advancements. Essentially, spillover benefits help third parties by providing benefits that party members did not invest in or contribute to. Some spillover benefits provide short-term benefits, such as the protection of flood control dams provided to citizens in surrounding floodplains, while others like education create long-term benefits for societies.

Spillover benefits, sometimes referred to as positive externalities, occur when benefits from transactions, construction and other methods of production, carry over to third parties not previously involved with the creation of those goods or services. In contrast to positive externalities, negative externalities take place when costs and expenses carry over to third-party producers and consumers.

Some spillover benefits, such as education, provide benefits for individuals as well as surrounding communities. People who graduate with a high school or college degree, for instance, have more opportunities to find employment. Typically, jobs requiring more skills and expertise have higher wages, too.

Although individuals derive direct benefits from having higher-paying jobs and employment, advanced education also helps surrounding communities. Citizens with higher education generally make positive improvements by contributing to a more productive workforce, better educational systems, reduced crime rates and establishing higher standards of living for neighbors.