Sick-onomics

The unprecedented flu epidemic on campus that we're witnessing illustrates an economic phenomenon, and I wouldn't have realized that had a freshman boy not articulated it between sniffs and coughs in our accounting class the other day:  "I wouldn't have come except I just can't miss class." 

He was faced with the decision of how to exchange "resources" (time and energy, in this case) for some kind of benefit (enhanced knowledge of debits and credits).  

His insight illustrated the economic concept of the "opportunity cost." When you make a decision, you inherently give something up. He deemed the missed notes and attendance too high a price to pay to warrant staying in the dorms, resting and recovering. 

But he also demonstrated another economic concept, because his choice created "negative externalities". Externalities are unintended consequences associated with economic decisions.  By coming to class, he brought germs into the air in the room, onto the desks and on any door handle he touched on the way. He also created noise of sneezing and coughing, and possibly detracted from the overall learning environment by introducing distractions and not participating and offering the benefits he might have otherwise brought.  

According to W&L Professor James Kahn's economics textbook, The Economic Approach to Environmental and Natural Resources, externalities must be unintended, be real and not monetary consequences, and must affect production and utility.  I think this boy's action meets all three of these conditions. He didn't come to class with the intention of getting other people sick--I hope!  The externalities were real variables-- he didn't create an unintended price change in the supply and demand for accounting lessons, he just brought germs to class.  And last, the externality affected the production and utility function of the "classroom market," because I, for one, spent the class thinking of hand sanitizer, not income statements.

I know this sounds like more of a complaint than an economics lesson but this poor little freshman's decision-making process showed how people act in their own self-interest without considering the social cost of decisions.  This is true with gasoline consumption, pollution creation, and any other economic decision that creates externalities... the market cost doesn't equal the full social cost because it's hard to put a price tag on pollution, water quality, or germy air. 

For the greater good of the campus, the "market" must change to prevent negative externalities, meaning that the academic environment shouldn't be so intense that the opportunity cost of healing and getting better is too high for students. 

-Katy Stewart