Page 217 - The Principle of Economics

CHAPTER 10 EXTERNALITIES 221
IN THE NEWS
Children as Externalities
THIS TONGUE-IN-CHEEK EDITORIAL FROM THE Economist, an international news- magazine, calls attention to a common externality that is not fully appreciated.
Mum’s the Word: When Children Should Be Screened and Not Heard
We live in increasingly intolerant times. Signs proliferate demanding no smoking, no spitting, no parking, even no walking. . . . Posh clubs and restaurants have long had “no jeans” rules, but these days you can be too smart. Some Lon- don hostelries have “no suits” policies, for fear that boisterous city traders in suits might spoil the atmosphere. Envi- ronmentalists have long demanded all sorts of bans on cars. Mobile telephones are the latest target: some trains, airline lounges, restaurants, and even golf courses are being designated “no phone” areas.
If intolerance really has to be the spirit of this age, The Economist would like to suggest restrictions on another source of noise pollution: children. Lest you dismiss this as mere prejudice, we can even produce a good economic argument for it. Smoking, driving, and mo- bile phones all cause what economists call “negative externalities.” That is, the costs of these activities to other people tend to exceed the costs to the individuals
A NEGATIVE EXTERNALITY
of their proclivities. The invisible hand of the market fumbles, leading resources astray. Thus, because a driver’s private motoring costs do not reflect the costs he imposes on others in the form of pollution and congestion, he uses the car more than is socially desirable. Likewise, it is ar- gued, smokers take too little care to en- sure that their acrid fumes do not damage other people around them.
Governments typically respond to such market failures in two ways. One is higher taxes, to make polluters pay the full cost of their anti-social behavior. The other is regulation, such as emission standards or bans on smoking in public places. Both approaches might work for children.
For children, just like cigarettes or mobile phones, clearly impose a nega- tive externality on people who are near them. Anybody who has suffered a 12- hour flight with a bawling baby in the row immediately ahead, or a bored youngster viciously kicking their seat from behind, will grasp this as quickly as they would love to grasp the youngster’s neck. Here is a clear case of market failure: parents
do not bear the full costs (indeed young babies travel free), so they are too ready to take their noisy brats with them. Where is the invisible hand when it is needed to administer a good smack?
The solution is obvious. All airlines, trains, and restaurants should create child-free zones. Put all those children at the back of the plane and parents might make more effort to minimize their noise pollution. And instead of letting children pay less and babies go free, they should be charged (or taxed) more than adults, with the revenues used to subsidize seats immediately in front of the war-zone.
Passengers could then request a no-children seat, just as they now ask for a no-smoking one. As more women choose not to have children and the number of older people without young children increases, the demand for child- free travel will expand. Well, yes, it is a bit intolerant—but why shouldn’t parents be treated as badly as smokers? And at least there is an obvious airline to pio- neer the scheme: Virgin.
SOURCE: The Economist, December 5, 1998, p. 20.