Should they have ashtrays in children’s car seats?
***Note: The correct link is now included.
For those of you who are sick of discussing external costs in my class, here is one more example.
Ultimately, this post will be concerned with smoking as it affects small children inside vehicles. Click here for the article that lets you know what is being proposed in Arkansas (there is an identical link at the end of the post).
As you likely know, smoking creates an external cost. For the uninitiated, an “external cost” is the term used by economist to refer to a cost sufferred by someone other than the producer or decision maker. In the case of smoking, these external costs are referred to as “2nd hand smoke”.
Economic theory tells us that because the property rights to “clean air” are poorly defined, the level of smoking will be beyond the economically effiicent level. Essentially the problem is that the price of using clean air is zero for the decision maker. As with any economic good, when the price decreases, people use more of it. The decision maker is not forced to pay the costs they are incurring on others. The result is too much smoking.
There are a couple of solutions to the problem. The first is to tax the external cost generating behavior. Taxing the decision maker will cause the person to reduce the activity in question, and in a perfect world perhaps the revenues collected from the taxes could be given to the injured parties.
A second solution is for the folks to get together and bargain (the Coase Theorem). In the current situation, it is pretty difficult for a 4 year old child to bribe their parents not to smoke (I tried once with my mom – she demanded more cash that my allowance allowed).
Another solution would be to let people sort themselves out geographically. The non-smoking and smoking portions of restaurants would be an example. But again, a 4 year old child might not get a vote here (and some would argue that employees might not get a vote either).Finally, there is something economists call regulation – basically a rule or law. Same link as above, but click here to find out what is being proposed in Arkansas to solve the problem.
Do you think the regulation is too onerous? Too lax?
–CT
April 18th, 2006 at 10:26 am
I’m late to the party…..but the link does not seem to work. And now I’m curious.
April 19th, 2006 at 2:42 pm
Maybe you are early.
They proposed a ban of smoking in cars when children under age six were inside the car.
The correct link is now posted.