Externalities and Internalities

Gibbons grooming each other - small

A Christian look at unintended ways that our lives affect others, and what to do.

The Cat House Café at the Memphis Zoo sits beside the gibbon exhibit, where Ringo and Talulah entertain guests with their funny faces and their acrobatics. When we eat there, my family and I get a table as close as we can to the picture windows overlooking their home, and yesterday the closest table was next to some loud, rambunctious little boys. Valuing Ringo and Talulah more than a quiet table, knowing that it is senseless to expect little boys to be quiet at the zoo, and being loud sometimes ourselves, we sat down and enjoyed a cheeseburger, waffle fries, and chicken strips for lunch.

Being a business and economics-minded person, I could not help but think about how the various people in the café were affecting each other; the costs and benefits of each interaction. The direct and intentional interactions were between workers preparing and selling food and drinks, and customers eating and drinking. There were indirect and unintentional actions as well. These can be thought of as externalities, which Investopedia defines as “A consequence of an economic activity that is experienced by unrelated third parties.” Typically, the costs or benefits of the goods or services being bought and sold do not reflect the costs or benefits of the externality. A classic example of a negative externality is a factory generating air pollution that its workers and nearby residents breathe. A classic example of a positive externality is that same factory cleaning up its exhaust and planting a park for its employees. The surrounding neighborhood would also benefit.

Internalities are unintended effects that a person inflicts on their future selves. Smoking, alcohol, and drug use will have a negative future effect on the person who uses them. Second-hand smoke is an externality related to this internality. A healthy diet and exercise will have a positive effect on health and will be positive internalities.

The economic activity at the Cat House Café is the preparing, buying, selling, and consuming food and drink. Negative externalities may include noisy children, dirty tables, and waiting in long lines. Positive externalities may include watching Ringo and Talulah, or even interacting with them through the glass. Negative internalities may be eating unhealthy food, and positive internalities may be rehydrating on a hot day. No matter the setting or characters, every situation has intentional and unintentional causes and effects – both externalities and internalities. Externalities and internalities may be intended or unintended consequences.

Notes on Externalities and Internalities

Some externalities such as lung disease from air pollution are universally seen as negative, while others such as the calming effect of a beautiful seascape are universally seen as positive. The negativity or positivity of other externalities and internalities are in the eye of the beholder. Some adults may not like the noise that little boys make, but others may appreciate their unrestrained joy and unbounded energy. A cheeseburger, waffle fries, and chicken strips may be bad for one’s health if eaten in excess, but some people may enjoy the taste and eat them rarely enough to avoid obesity or heart disease. A café full of strangers may frighten or irritate some people, but others may see that same café as a place to have interesting interactions and make new friends.

Externalities can be economic as we discussed, but can be social and moral as well.

A Christian View

The Bible refers to externalities. The primary purpose of the stringent laws regarding cleanliness and uncleanliness (Leviticus 11-15) was to create a community set apart to God, but a secondary effect (positive externality) is to keep disease and injury from spreading among the people. Keeping the Sabbath as a day of rest is primarily for remembering the Lord and thanking Him for his goodness, but has the secondary effect of improving worker health and productivity. All other parts of the Law (Torah), such as that regarding social justice, follow this pattern. When Israel kept the Law as commanded, notably during the reign of David, they prospered spiritually and materially. Disease and injury were minimized, workers were healthier and more productive, and social justice was improved. When Israel did not keep the Law, they languished spiritually and materially. No wonder David said, “Oh how I love thy Law (Psalm 119:97).” The Church is not required to keep the ancient Hebrew Law, but must follow the principles that underlie it.

The Bible also refers to internalities. Proverbs 23:29-35 warns people not to linger over wine, not to spend a lot of time trying drinks, and to beware the effects of too much drink. Ephesians 5:18 repeats and reinforces the Old Testament admonition. Proverbs 7 discusses another internality – the danger of adultery.

Like all people, Christians have the freedom to interpret events positively or negatively. We have the power to transform a negative externality into a positive one. We can choose to see noisy boys as a nuisance or as a source of joy. We can let ourselves be bothered by a crying girl or we can reach out to comfort her. The Apostles praised God that they were judged worthy to suffer as Christ suffered and for His sake (Acts 5:41). Paul and Silas were beaten and thrown in jail. They responded not with despair at their pain and anger at the injustice, but with prayer and songs. A positive externality occurred – the jailer and the other prisoners heard the Gospel and some followed Jesus (Acts 16:22-31).

One of the most important principles for Christians to remember in considering externalities is to avoid causing others to stumble. Our lives are not our own, and we live for God, not for ourselves. Therefore, we must limit our freedom for the benefit of others (Romans 14, 1 Corinthians 8).

Neither drinking nor gambling is forbidden by Scriptures. But when a Christian drinks or gambles, even if he or she does not drink or gamble in excess or suffer any bad personal effect, he or she runs the risk of encouraging others to do the same. If one or more of those people become alcoholics, or suffer a loss of family, job, or something else, the person who set a bad example shares part of the blame (Mark 9:42-43). Extramarital sexual intercourse is forbidden by the Bible (Galatians 5:19-21, Hebrews 13:4). When followers of Christ have extramarital sex, they bear the burden for their own sin, and the burden of the externality…encouraging others to do the same by their example. The same is true of every other sin; there is guilt and shame in intentionally or unintentionally encouraging others to commit sin whether or not a person does it him or herself.

Conclusion

Our thoughts, our words, our actions, and our lives affect others in ways that we know and in ways that we do not. Intentionally and unintentionally, we impact our world. Christians should be cognizant of both how we affect others and how they affect us. We must control our thoughts, interpreting externalities and internalities in ways that glorify God. Then we must modify our actions to generate externalities and internalities that exalt our Lord.

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