What's Your Best Externality?

The last two years I’ve run an “externality” contest in my giant intro class, offering $5 to the student who comes up with the best example.

Both positive and negative externalities are welcome. I call on five students to tell the class their examples. My favorite this year was the student whose brother started wearing cut-off t-shirts (muscle shirts) but promptly proceeded to gain 100 pounds of fat. Worse still, the family name being Quackenbush, the brother had a duck tattooed on his flabby upper arm.

By voice vote, however, the class awarded the $5 to a woman who offered the negative externality of the throbbing bass played full-blast on the pickup truck parked in the lane next to you at a stoplight.

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  1. Kate says:

    Negative externality: When my husband buys cheap, nasty dog treats which the dog consumes, then regurgitates…on me.

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  2. Nerf says:

    Can I just say I stepped in an externality this weekend?

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  3. Sally says:

    My neighbor has ADT alarm system advertising on their front lawn – little sign in their flower bed and such. That creates a negative externality the same way the Club does for auto theft.

    In contrast, I own a .40 Beretta and sleep with it next to my bed (I’m single without kids, so it’s not as dangerous as it sounds). When I shoot my first home invader, it will provide a positive externality similar to the LoJack.

    Actually, it’s widely known in my area that most people own firearms. I think the positive externality from that is already in action.

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  4. KB says:

    Other people’s lack of style. Why should I have to see that just so they can wear cheap clothes?

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  5. Charlie Wood says:

    Someone pulled the fire alarm in UTC (on the UT campus) this morning, probably to avoid a midterm, just as my health econ professor was (finally!) starting to talk about health care reform in the US. Of course, the building was evacuated. Who knows how many students and faculty members were affected…


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  6. Icon says:

    To be incredibly uncreative, pollution caused by production whose value is not covered in the cost of production.

    To be more creative, bad governance (that is, politicians who do not implement pareto-efficient public policies) could be said to be an externality of partisan politics.

    The market (which one might call the ballot boxes) is where voters exchange votes for the feeling that they elected the right person for the job and whatever expected utility they will get from that person or their opponents winning.

    There is a political incentive for a politician to compromise the principle of good governance in order to affiliate with a party, because voters will be more likely to support them. Consequently, uneducated voters often vote party-line, regardless of the actual issues or the merits of either politician’s opinions.

    Thus, we can often end up with bad politicians in office if they’re able to energize a large enough sector of the electorate to win a primary and party members will vote for them in the general election strictly because of their membership.

    How’s that for a not-so-common example?

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  7. Daniel says:

    Good: my male flatmate stores his Limburger cheese in our refrigerator. I don´t like Limburger. And I don´t like to clean the house. Since we have a female flatmate, the bathroom is always clean. But in the first place we decided to share our flat with her, because she is very beautiful.

    Bad: a very large disco opened in our neighborhood and the low prices for beer and vodka attract a, lets say: lower class, audience. My bicycle is in very bad shape now.

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  8. Corey says:

    Political activism for candidates I don’t like

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