Reflection: Positive vs. Negative

Pier Goldreich; Honorbound

“The gap between the private cost and the social cost of some behavior”[1]according to the book, Naked Economics: Undressing the Dismal Science is the definition of an externality. There are two different types of externalities: positive and negative. A Positive Externality is one that results in a positive outcome for society. For example, “I once had an office window that looked out across the Chicago River at the Wrigley Building and the Tribune Tower, two of the most beautiful buildings in a city renowned for its architecture. On a clear day, the view of the skyline, and of these two buildings in particular, was positively inspiring. But I spent five years in that office without paying for the utility that I derived from this wonderful architecture.”[2] In this example, the man whose office overlooks the two most beautiful buildings in the city of Chicago, he is saying that his utility is increased with the radiant view he enjoys every day. This example is a Positive Externality because the people he works with are happier because he is in a better mood.

In addition to Positive Externalities, there are also Negative Externalities as well. An example being, “Mobile phone use is under stricter scrutiny, both in public places, such as restaurants and commuter trains, where the behavior is fabulously annoying, but also in vehicles, where it has been linked to a higher rate of accidents. Texting is the second-most dangerous thing you can do while driving a car, next to driving drunk.”[3] This example is a Negative Externality because it results in a potentially bad outcome; mobile phones have a positive impact on society in most ways but if used the wrong way can result in a very bad outcome (or a Negative Externality).

In today’s world, especially since we are in the time of an election, the candidates are trying to receive votes from the country with their incentives that they are trying to implement. Donald Trump, for example, gives the country a glimpse of how a Negative Externality is executed. Trump wants to build a wall in order to keep illegal immigrants from Mexico from crossing the border and entering our country and taking jobs from worthy American citizens. For this policy, in regards to how it applies to a Negative Externality is that the voters who vote for Trump are enforcing the policy of not allowing people to cross the border (party number one), Donald Trump himself as the executor of the plan (party number two), and lastly, the third party, the Mexicans themselves. The gap between social and private costs increases with the Mexicans wanting to come over.

This is a Positive Externality that can have a negative outcome: Although Trump is attempting to keep the illegal people from entering our sacred country, which is a Negative Externality, he is also attempting to help the country by keeping us safe and eliminating illegal immigration. However, with this, comes a negative effect: The Mexicans want to escape the world they are trying to get out of and can’t because we are not letting them come over. While I was reading about externalities, I learned about how they effect the country and how they are used in order to help convey a positive or negative reflection.

[1] Charles Wheelan, “Government and the Economy: Government is your friend (and a round of applause for all those lawyers)”, W.W. Norton & Company Inc., 2010 55

[2] Charles Wheelan, “Government and the Economy: Government is your friend (and a round of applause for all those lawyers)”, W.W. Norton & Company Inc., 2010 58

[3] Charles Wheelan, “Government and the Economy: Government is your friend (and a round of applause for all those lawyers)”, W.W. Norton & Company Inc., 2010 57

Fig 1: Maynard-Atem Lisa, “Accentuate the Negative… And the Positive!”, Salesforce Marketing Cloud Blog, December 11, 2014, June 15, 2016


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