04 May 2021

Tyler Cowen’s Expansive Definition of Externalities

David R. Henderson, Health economics, Tyler Cowen 1 Comment

Jeff Bezos can spend his money on himself, or he could give it to other people, so they could spend it on themselves. If he opts for the former, this is a clear-cut negative externality. Right?

I think most economists would agree that that is a terrible argument. And yet, it seems to be what Tyler Cowen says, regarding old people spending their own money on themselves before they die, rather than passing it on to others. David R. Henderson shares my confusion.

One Response to “Tyler Cowen’s Expansive Definition of Externalities”

  1. Andrew_FL says:

    This is actually the entire implicit premise behind the false notion that we spend “too much” on healthcare in general-since a huge chunk of that spending is old people spending their own money on themselves.

    Folks like Tyler have bought so hard into the conventional wisdom of “too much healthcare spending” that it completely warps their reasoning on the subject.

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