The price of a pint of beer is ascending at an astronomical rate with the previously unfathomable concept of a £5 pint becoming a much less gob-smacking occurrence. But how much is that £5 pint really worth to you? Chas and Dave  aim to make some sense of it all at their local, considering some of the mysterious concepts that are core to impact measurement.
Chas: “Ah when that first sip of hoppy goodness hits the back of my throat – I feel instantly chilled out”
Dave: *Thinking* “Outcome 1 – chilled out, that’ll do”
And it’s as simple as that – we understand the outcomes that happen for beneficiaries by hearing what they have to say about what changes for them. Chas had a sip of beer and now he feels chilled out! Of course there are a number of other changes Chas will experience, particularly once he moves on to pint five, but for now let’s just focus on the first outcome.
Understanding how the change happens
One crucial stage that comes as part of identifying what changes is to understand how or why things change. Why does Chas feel so relaxed?
Chas: “This beer is just so damn tasty. And I love this pub – great vibes, great music. And you’re a good fella Dave. So yeah, why wouldn’t I be relaxed?”
There’s a few things that have contributed to Chas feeling relaxed – the beer, the atmosphere, the company. It’s all captured in the £5 price he paid. We’ll come on to talk about other things that may have contributed, besides the pub experience, later on.
Asking people what they think has changed for them (and others) and why is called stakeholder engagement. In this case, we’ve just asked Chas. But we could have asked others too – Dave, the barman, Chas’ Mum, etc. It’s also likely a lot of people much cleverer than you and I, social impact boffins you might say, have already done some complicated research into what changes and why for people like Chas when he goes to the pub, so it’s worth having a leisurely peruse of any relevant literature too. It makes great holiday reading!
Dave: “How relaxed do you feel Chas, out of 10?”
Dave: “Hmm he would say that...”
One of the principles of impact measurement is to involve beneficiaries and stakeholders as much as possible in the process. Dave asked Chas for his opinion on how relaxed he is feeling but we can’t take subjective wellbeing accounts as gospel. Ideally, we ‘triangulate’ the data. That is, we ask other people what they think about the beneficiary.
Dave: “I’ve got to say he’s pretty chilled out, but far from ‘ultimate zen’. I’d give him an 8 out of 10.”
And who else could Dave ask? One relevant stakeholder is the pub itself. Dave chats to the barman:
Dave: “You’ve seen Chas in here before, as well as hundreds of other punters. How relaxed would you say he seems, out of 10?”
Barman: “Well look at those guys over there, they’re wearing sunglasses in doors, they’re wearing kaftans and they’ve already worked their ways through 4 G&Ts. I don’t think Chas is much more chilled out than your average punter. 6 out of 10.”
Interesting – that’s a 10, and 8, and a 6. To measure how relaxed Dave is, some people would average out the responses. That gives us 8, whizz kids.
When it comes to valuing outcomes, there are a few ways of doing it. Chas paid £5 for his pint so clearly he at least values it at that much. This is a ‘market cost’ valuation. We could also look at market substitution. Let’s play a game of ‘Would You Rather’.
Earlier this week, in the office (playing Fussball):
Dave: “Chas – would you rather... a pint of beer down the pub or some new headphones?”
Dave: “Would you rather a pint of beer or a new t-shirt?”
Chas: “A new t-shirt, of course.”
Dave: “Would you rather a pint of beer or a pair of socks?”
Chas: “I’ll have a pint, cheers.”
So as it happens, the market substitution bring s us a similar response. Depending on where you get your pants and socks from, Dave values beer at circa £5.
Another method of valuing outcomes is through social wellbeing valuations. The kind people at HACT have produced a useful document which outlines the level of wellbeing people get out of a range of things, such as volunteering and playing sport. According to social well being policy guru extraordinaire, Daniel Fujiwara: “Wellbeing can be seen as the ultimate intrinsic good – it is ultimately what matters to us.”
One thing the HACT people assessed is ‘Socialising and meeting on most days’ and the value of doing this regularly is £3,000 per year, which comes out at £60 per week. Let’s call most days a week five days and we get a value per day of £12. And if we assume that one pint at the pub equates to socialising then for a cost of £5 Chas is getting a maximum social wellbeing value of £12. How about that, eh?
However, we have made a sweeping assumption that ‘socialising’ at the pub is the only reason Chas is feeling relaxed. It’s certainly contributed, as Chas alluded to earlier, but what else has? Let’s take a step out to wider world to understand how much of this value is down to the pub experience itself.
How much is Chas' pint really worth? Find out in Part 2.
Find out more about CAN Invest's previous work.
 The alter egos of two anonymous CAN team members.