Wednesday, March 31, 2010
More Externalities -- Toxins and Consumer Products
Every society needs to make a choice about how to prioritize consumer safety. If you try too hard to avoid problems, you can end up stifling daily life. Outlawing gasoline, for instance, would doubtless reduce pollution and respiratory disease, but no one is suggesting such a step. Europe, with its hostility to genetically modified foods, arguably errs on the side of being too cautious about chemicals and other such substances.
But the United States clearly seems to be on the other side of the line. We are not taking toxic risks seriously enough.
Several common diseases, like certain cancers and developmental disorders, have been rising in recent decades, and scientists are not sure why. In some cases, evidence suggests chemicals may be the reason.
Nobody can be sure, though. The science is not far enough along, partly because our regulation of toxins is so limp. Companies don’t have to release much of their internal safety data. And regulators face a terribly high burden of proof. They can often take action only after they have demonstrated that a substance is harmful — a task that corporate secrecy can make impossible.
To be clear, much of the article is not directly about the negative externalities associated with chemical use. Rather, Leonhardt is mainly focused on another source of market failure -- lack of information. For the market to work "properly", all the parties to a transaction need to have full information about what they are buying. Leonhardt's main argument is that consumers are frequently ill-informed about the chemicals they are consuming (and the long term effects of that consumption on their health and well-being). As such, he argues that the government should be more involved in obtaining information from manufacturers and informing consumers about the risks of various products (or perhaps more directly involved in the protection of consumers by preventing the manufacture and sale of "dangerous" products).
Tuesday, March 30, 2010
Externalities Example -- Bees and Pesticides
For years the news has been the same: Honey bees are being hammered by some mysterious environmental plague that has a name -- colony collapse disorder – but no established cause. A two-year study now provides evidence indicting one likely group of suspects: pesticides. It found “unprecedented levels” of mite-killing chemicals and crop pesticides in hives across the United States and parts of Canada.A classic negative externality.
EC 443/553 -- Preparation for class Wed
Supply and Demand
Consumer and Producer Surplus
Diminishing Marginal Utility
Public Good/free rider problem
Gross Domestic Product (GDP)
Check back later, I may add more as I think of them.
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