Tag: external costs

Curb Your Enthusiasm — Appetizer allotment

Larry David is adamant about the unwritten rule of appetizer allotment. In this scene, Richard Lewis is also eating “too much” of the hummus that they have ordered to share. The “unwritten rule” is that the dish should be split evenly among the diners, but there is a strong personal incentive to eat more than your share. In a sense, this is similar to the tragedy of the commons. While it’s in the best interest of the group to split the resource fairly, some people may try to take advantage of the situation.

Thanks to Alex Marsella for the clip recommendation!

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After Life — Chip Externalities (explicit language)

Tony joins his colleagues for lunch at a local pub to discuss potential leads for their newspaper, but he’s disturbed by a gentleman loudly munching on chips behind him. The man appears to be ignorant of the external costs he’s imposing on those around him and is focused on only his own satisfaction.

When people are unaware of the external costs they are imposing on others, they tend to overconsume, literally. Since there aren’t clear property rights, it’s not clear who should make the determination of appropriate volume. Tony could pay the man to stop eating his chips, but Tony may argue that the man should have to pay for the right to eat his chips so loudly. It’s harder to reach a solution without clearly defined property rights.

Thanks to Sheena Murray for introducing me to this show. She submitted a different clip from the show, but I looked up the wrong episode and happened to find this clip instead.

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Friends — The One With All the Candy

 

Monica decides she wants to makes candy for the neighbors even in an attempt to get to know them better (or to liked?) She decides to place the candy in a basket on her door so that anyone can take a piece, but a tragedy of the commons ensues. Her neighbors are taking more than their “share” of the candy and are bothering her throughout the day to get more candy from her. When the commons has been exhausted, the neighbors form a mob.

Thanks to Dawn Renninger for the clip recommendation!

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Erin Brockovich — Negotiating Damages

There appears to be a coverup of contamination of the local water supply by PG&E, but the impacts are becoming more visible. In this scene, Ed Masry meets with a PG&E lawyer to “negotiate” a settlement for damages causes by the contamination. While PG&E may not have believe their dumping was causing externalities, it appears that they may have imposed serious external costs on the region. One of the concerns of litigation of this sort involves determining the appropriate value of the reduced quality of life resulting from these external costs.

Thanks to Dawn Renninger for the clip suggestion!

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Mumbai Police — A Solution for Noise Pollution

Mumbai drivers are apparently notorious for honking, even when the light is red and people can’t move. The Mumbai police decided to incentivize drivers in order to reduce some of the noise pollution in the city. The police installed noise meters and if the decibel level reaches a certain threshold, the timer on the lights resets. A message flashes to let drivers know that the more they honk, the longer they wait!

Another fun policy intervention occurred in Europe to help drivers slow down.

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Blackish — Castle Neighbors

 

This opening cartoon depicts Dre dutifully maintaining his castle and describing the lengths men go to in order to protect their castle. Unfortunately, we can’t always control what neighbor’s do with their castle and their decision to throw parties and disturb us is (seemingly) out of our control. The Coase Theorem would argue that so long as transaction costs are low, people should be able to bargain and sort out external costs imposed by private actions. The insinuation by Dre in this scene is that the transaction costs may be just a bit too high.

Clip recommended by James Tierney:

 

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The Good Place — Externalities & Unintended Consequences

 

Things seem off in The Good Place, but it turns out that the as the world becomes more complicated, seemingly identical actions (like giving flowers) can have unintended consequences that most people don’t realize. Our private actions can have social costs that we’re unaware of and would probably try to avoid if we were fully informed of their costs.

Thanks to Kalina Staub (Twitter) for the clip!

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Young Sheldon — Germaphobe

Sheldon is a bit of a germaphobe and flu season may be the worst time for him. While one sneeze could be caused by a variety of different items, someone who is sick may be contagious and harm others. Having the flu can impose a variety of external costs on others if they get sick. These externalities often plague college classrooms around exam time though, but it’s not as convincing of a story as The Dead Grandmother/Exam Syndrome.

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Shameless — Crying Baby

The eldest daughter takes care and provides for most of the family because their father is an alcoholic and mother is absent in their lives. One of the daughters, Debbie, gets pregnant and decides to have the child. After having the baby, she brings it back home and begins to live in her house with her newborn. One morning, the baby starts to cry. Everyone in the house is woken up by the newborn’s cries and is extremely angry. The baby crying in the morning is an example of a negative externality. By crying and waking everyone up, the baby is costing the third party, in this case the family, sleep, as a result.

Thanks to Annie Mae Weiss for the clip and description!

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