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

Think Like An Economist

CHAPTER

Mask Wearing

As a society, we just don't do enough of these activities that have positive externalities. We tend to underestimate or undervalue the total benefits to everyone else when we make our individual decisions. And social norms can help - in eastasian countries it's pretty normal and even expected for people to wear face masks during cold weather. A subsidy gives you a private benefit that you know is roughly equal to the benefits to others,. There can also be rules which change your own private cost and benefit calculation.

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