Tuesday, May 14, 2013

econ 101: externalities

externalities is an economic concept for "side-effect" or "spill-over". it occurs if a person’s activity affects the well-being of an uninvolved person. this term comes from the fact that someone external to the action or transaction is affected by the activity (or production of consumption of the good). this may be positive (externality) or negative (externality). A positive externality occurs if an activity creates benefits for uninvolved people. A negative externality occurs if an activity creates costs (harm or discomfort) for uninvolved people.

lately i have been thinking of this concept in a 'not-so-economist-way'. i have reason to believe that i have been experiencing negative externality. one person's activity have been affecting my well-being (as an uninvolved person in the activity) for about a month now.

have you ever been disturbed by 'noises' of a neighboring space while you are doing your 'writing jobs' ? (remedy: tell the 'whoever causes the noise' to tone it down or if to no avail, let them feel that you are disturbed in any manner you know how) ...have you ever inhaled second- hand smoke that lead you to bouts of irritating cough? (remedy: cough your lung out and drink lots of water or find out next time where/whom the smoke came from and politely ask him/her to just swallow it)...

have you ever been distracted knowing something illegal (or immoral) is going on nearby and you just can't (or so far, won't) do anything about it 'coz you might be branded as naive or self-righteous- so distracted that it costs you your peace during your established work-hours? (remedy: read your bible and ask for inner peace or sing your prayers out loud so your mind won't have space to think of other things or talk to the people involved as if they'd listen to you and feel ashamed that they'd stop doing it or find a new place and wonder what externalities will be in store in the new place)...i could go on and on about it but i guess somehow you get the picture. what are you to do? what am i to do? - still, das ist die Frage!

3 comments:

Anonymous said...

OMG! So similar to what i am facing right now. So there's an econ term for it. (lol).

Anonymous said...

If I remember correctly, my teacher calls the remedying as Internalizing Externality. Hahaha. Econ101 is such an interesting subject.

Ayel said...

Wow! Good. There's plenty of negative externalities here and we usually choose to silently complain about them. Making positive actions, like you mentioned here, would make the situation better.

It's always a challenge for teachers to simplify abstract concepts or to translate them into a context that would be easier for the students to digest.

Altogether, it's a great post!