Externalities in our Baby’s Food


The American Academy of Pediatrics issued the guidelines in a statementand scientific technical report on Monday. The group joins other medical and advocacy groups that have expressed concern about the growing body of scientific evidence indicating that certain chemicals that enter foods may interfere with the body’s natural hormones in ways that may affect long-term growth and development.

The pediatricians’ group, which represents some 67,000 of the country’s children’s doctors, is also calling for more rigorous testing and regulation of thousands of chemicals used as food additives or indirectly added to foods when they are used in manufacturing or leach from packaging and plastics.

Among the chemicals that raised particular concern are nitrates and nitrites, which are used as preservatives, primarily in meat products; phthalates, which are used to make plastic packaging; and bisphenols, used in the lining of metal cans for canned food products. Also of concern to the pediatricians are perfluoroalkyl chemicals, or PFCs, used in grease-proof paper and packaging, and perchlorates, an antistatic agent used in plastic packaging.

Source: NYT 7/24/18.


Those Damn Government Bureaucrats, Keeping Us From Eating Poison Food Again…

At least 53 people have been sickened by tainted, chopped romaine lettuce in an expanding E. coli outbreak that now spans 16 states, the Centers for Disease Control and Prevention said on Wednesday.

At least 53 people have been sickened by tainted, chopped romaine lettuce in an expanding E. coli outbreak that now spans 16 states, the Centers for Disease Control and Prevention said on Wednesday.

Source: New York Times, E.Coli Outbreak Tied to Romain Lettuce, 4/19/18.

Unless you have an advanced chemistry lab in your house or you grow all your own food — meaning, 99.99% of the US population — you assume the food you buy in grocery stores and are served in restaurants is safe to eat.  That assumption is right with only infinitesimal exceptions.  Let’s do the math using some “back of the envelope” numbers

  • 360 million Americans
  • Each eats 3 meals a day on average
  • Each meal consists of 3 food items on average

That means, on average, conservatively, Americans consume 3,240,000,000 — that’s 3.2 billion — food items per day.   This is a conservative estimate because in the age or processed foods, most food items contain dozens of ingredients.

Accordingly to the article, over 24 days, March 14 to April 6, or 77,760,000,000 (that 77.8 Billion) food items consumed, 53 people were reported to be made ill by the contaminated lettuce. Even if the 53 reported cases was only 1/100th of the actual number of e.coli cases, that means the food supply error rate was only 1 sickness per 147 Million food items.  The average person, who lives to 80, only consumes under 300,000 food items his his or her life has a less than 0.02% chance of food poisoning in their lifetime.

In contrast, the National Safety Council reports your risk of dying from a lightening strike in your lifetime as 1 in 114,000.



Map: Toxic Chemical Plants in Flood Plains

Building toxic chemical plants in flood prone areas is another externality.  Flood prone land is cheaper to buy, but costs the manufacturer “saves” are in fact transferred in space and time to neighbors and downstream water users when the next flood spreads the toxic chemicals far and wide.

Houston has a particularly heavy concentration of these risks, but industrial farms with sewage settling ponds and mines with settling ponds adjacent to water routes are scattered throughout the United States.

Map - Toxic Chem Plants in Flood Plains - NYT 2018-02-10

Source: NYT, 2/10/18.



Externality – Plastic Waste

China had been processing at least half of the world’s exports of waste paper, metals and used plastic — 7.3 million tons in 2016, according to recent industry data. Last July, China notified the World Trade Organization that it intended to ban some imports of trash, saying the action was needed to protect the environment and improve public health.

“Large amounts of dirty wastes or even hazardous wastes are mixed in the solid waste that can be used as raw materials,” Beijing wrote to the W.T.O. “This polluted China’s environment seriously.”

Chinese officials also complained that much of the recyclable material the country received from overseas had not been properly cleaned or was mixed with non-recyclable materials.

The sudden move has left Western countries scrambling to deal with a buildup of plastic and paper garbage while looking for new markets for the waste.

Source: NYT 1/12/18.

The “Social Fact” of Smoking


The French sociologist, Emile Durkheim, introduced the concept of “social facts”  –  social norms so strong that they control human behavior and structure human choice – a concept that flies in the face of economic (and utilitarian) assumptions about rational actors with perfect information “maximizing” their utilities via exercising strategic “choice”.

Robert Frank’s Times opinion piece today describes one “social fact” – the prevalence of smoking behavior among peers is the best predictor of any individual’s propensity to smoke.

“By far the most powerful predictor of whether a person will smoke is the percentage of her closest friends who smoke. If the share of smokers in someone’s peer group rises to 30 percent from 20 percent, for example, the probability that she will smoke rises by about 25 percent. Whereas most of my teenage friends were smokers, relatively few of my sons’ friends were. In 2016, only about 19 percent of American men were smokers, and only about 14 percent of women.”

With smoking we have a social fact that benefits large global corporations (Altria, Brown & Williamson, R. J. Reynolds, Lorillard, Philip Morris, etc.) but hurts the average population of smokers and non-smokers (both current non-smokers via second hand-smoke and any future child via the social pressure of social facts in smoking cultures.

Externality: Food poisoning

A reasonable, but perhaps not accurate, assumption of US consumers is that they food they are eating will not make them sick.  Yet, every year, about 15% of the US population gets sick from food they eat.

About 48 million Americans get sick from food-borne diseases each year, according to the agency. Of those, 128,000 are hospitalized and 3,000 die.

A radical free marketeer would say “caveat emptor” – let the buyer beware. But in the age of industrial agriculture and a high societal reliance on prepared foods, such ideological purity is not realistic.  Consumers cannot tot around a food testing lab to every meal they eat or every grocery store they visit.  We rely on a combination of the merchant and our government to protect us from food that makes us ill. This is because, the cost of that Chipotle burrito or that head of lettuce does not capture the true cost of giving perfect information to the consumer about the safety of the food they are about to consume. That is why we need regulations.

Cigarette Externalities

This full page advertisements appeared in several national newspapers starting today, due to a Federal Court order, from a long-delayed Federal Court case that found US Tobacco companies systematically lied about the health hazards of cigarette smoke for decades.

Smoking was and remains, a massive transfer of cost from the tobacco manufacturers to smokers and the society at large who pay the increased medical care costs caused by smoking. This is the classic externality.


A Federal Court has ordered R.J. Reynolds Tobacco, Philip Morris USA, Altria, and Lorillard to make this statement about the health effects of smoking.

  • Smoking kills, on average, 1,200 Americans. Every day.

  • More people die every year from smoking than from murder, AIDS, suicide, drugs, car crashes, and alcohol, combined.

  • Smoking causes heart disease, emphysema, acute myeloid leukemia, and cancer of the mouth, esophagus, larynx, lung, stomach, kidney, bladder, and pancreas.

  • Smoking also causes reduced fertility, low birth weight in newborns, and cancer of the cervix.

NYT, Sunday 11/26/17. P. 13.

Chart: Comparative Automobile Deaths

While US government regulations dramatically improved automobile safety and reduced US highway deaths per million miles driven, in recent years we have fallen behind other industrial countries.

The US now lags behind many industrialized countries in road safety. Had we kept up with the other countries, 30 fewer people would die in highway accidents every day or 10,000 fewer each year.

Auto Deaths - NYT - 2017-11-20

Source: NYT 2017-11-20

Water Pollution … Just the Transfer of My Costs to You (the unsuspecting downstreamer)

Polluting PipesRegulations are a real annoyance, costing the manufacturer more money and annoying the workers in their toils (think having to wear particle filtering masks in an already hot coal mine). But then the workers, consumers, or the neighbors to the plant need the results of the regulation…



“[A] local shoemaking company, Wolverine Worldwide, the maker of popular footwear brands like Hush Puppies and Merrell and a mainstay in this area since 1883.

Decades ago, Wolverine dumped sludge and leather from its tannery in the woods around here. For years, the company and the government stayed mostly silent about the trash piles, even as developers built houses and a golf course near them and even as researchers documented serious health risks from chemicals in the sludge.

Ms. Schweinzger’s well water is among at least 30 to have been found to exceed the federal government’s recommended lifetime exposure levels for PFAS, also known as perfluoroalkyl and polyfluoroalkyl substances. She lives on the same street where Wolverine once dumped sludge that included Scotchgard, the waterproofing chemical used in Hush Puppies shoes that contained PFAS.”

Regulation is merely the making explicit the true cost of the manufacture, distribution, and sale of a product – the true costs that have previously been hidden as externalities and often born by unsuspecting outsiders to the transaction.

NYTimes article 11/25/17.