Sunday, March 21, 2010

Negative Externalities?

Here's a funny cartoon.
Do you think it represents an example of a negative externality (cost imposed on others outside the decision/transaction)?  And if it's funny to outsiders, does that make it a positive externality for the observer?

Regardless, it reminded me of my days with the Chicago Fed. About the time the Treasury started putting security threads in the currency, students started telling us how easy it was to pull the threads out (something that has been remedied, I think). We used to remind them that doing so could have negative consequences for them when they were "identified" for passing "bad" currency or willfully "damaging" currency; or it might result in unnecessary costs to others outside the transaction.

Enjoy what's left of your weekend - even if you're suffering from "busted bracket syndrome."

1 comment:

Mike Fladlien said...

I think crime is always a negative externality. In this toon, I think the child destroyed private property even though she thinks it's a victimless crime. The toon is definitely a positive externality for me.