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S E16: Externalities - The Full Cost of the Choices we make

Think Like An Economist

CHAPTER

The Problem With Negative Externalities

D we also have negative externalities, which is when other people suffer due to something we do or consume. You know, if you smoke, you face costs in the form of bad consequences for your health,. but you'll also, i guess, benefit om if you enjoy smoking cigarettes. A lot of environmental issues are about negative extenalyses. We mention driving and how exhaust fumes lead to climate change. Yes? Because we don't have barrias in the sky which keep car omissions confined to a small area. So the problem with negative externalities is that we don't fully account for the cost of our actions on others. Therefore, we often engage too much in activities which

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