Andre LaRenzie, Chapter 3, Question #6

Chapter 3 of "Naked Economics" is about the Government and the Economy. The author, Charles Wheelan, discusses the topic of externalities in this chapter. He defines externalities as private behaviors that have social costs. There was an example that shocked me. The example of Cigarettes having both positive and negative externalities left me amazed. I though there wasn't a way that cigarettes could have a positive externality because it causes so many deaths, indirectly and directly, but there is. Smokers generally die younger than non smokers. The early death of the smoker leads to the social security being uncollected, and returned to the government. On average the government gains 148 million dollars of smokers dying young. I found that truly amazing, and somewhat disgusting.