Scott Stewart, Chapter 3, Question 4

In the book the author brought up the problem of externalities. He provided 3 different ways externalities can be dealt with. First, the party being affected pays the party that is affecting them. For this the author gave the example of him paying his neighbor to stop playing the bongos, and this can only happen if Stuart, his neighbor, has the right to play bongos in the first place. Second, His neighbor Stuart could pay the author in order to play the bongos, and this would only happen if the author had the right to silence. Finally, the government can put law in place to limit or stop externalities.

another problem he brought up is how people hate the government, however he proved that it was necessary for any market economy to survive.

Zach Du, Chapter 3, Question 6

In Chapter 3, Wheelan talks about how the government plays an important role of today's society: "government lowers the cost of doing business in the private sector in all kinds of ways: by providing uniform rules and regulations, such as contract law; by rooting out fraud; by circulating a sound currency. Government builds and maintains the infrastruction- roads, bridges, ports and dams- that makes private commerce less costly" (69). According to the book, some people from low income families arguing with the government that all of the tax money are flowing to middle and upper class. But from this chapter, we can tell that our society's harmonic atmosphere is all created by the government and the government will use the budget on improving city construction. All in all, people should always see things in two sides; have faith for the government and believe it is beneficial for all the private commerce owners.

Olivia Barr, Chapter 3, Question 7

While reading this chapter I gained a broader understanding of how difficult it can be to correct an externality. When there is an externality, it means that one side of the groups involved gains more than the other in social benefits, or the other is suffering a high social cost. Bargaining does not always work. Bargaining with smokers to stop smoking would be relatively difficult because smoking is addictive, and smokers are often not concerned with the effects of second hand smoke on others, therefore they would be unwilling to negotiate some type of policy that would move the equilibrium, social cost/benefit and all, to a more appropriate location. In some externalitites, controversy arises as a third party works to decide who should pay the price so that the externality is eliminated. These are the situations that we often hear about in the media as they relate to politics. On a nearly daily basis, you can find news articles about new taxes on sugar, cigarettes, co2 emissions, or lobbyists pushing for higher subsidies to provide incentive to drive electric cars because their cost is too high for their social benefit. Before reading this chapter I thought of these topics as mundane space fillers for times when nothing important was going on in the news, but now I can look at them as fascinating economic debates, which is pretty cool.

Angela Scharf, Chapter 3, Q.7

     This chapter was primarily covering externalities and how the government intervenes in the market. An externality is essentially the relationship between the private costs compared to social costs, or rather people behaving in a way that will impose costs on other people while benefitting themselves without a direct cost. The gap between the private cost and the social cost can be corrected through government taxes. This is one way the government intervenes in the market; if a behavior is generating a bad externality, they will impose a tax to help compensate. This works well in two ways: 1) the government is acting on business actions that will prove detrimental in the future and 2) the tax money can be used to absolve the business's negative behavior through research into substitutes.
     Another more controversial topic regarding externalities is the argument of rights and maximum utility in multiple parties. How does the government decide whether the people (or government) should pay a business to stop its behavior, or whether the business should pay the government (or people) to continue its behaviors? In order to determine the right course of action, the private cost and social cost in both parties is weighed, and acted on accordingly.
     An example they give in the book is the classic story of an obnoxious neighbor. If the neighbor is playing their music at an inconvenient time, their utility could be worth $30, yet you have an important final the next morning and the cost of their annoyances is worth $60. If you give the neighbor $45 to be quiet for the rest of the night, then maximum utility has been reached because each of the parties is better off than they were to begin with. This interaction makes sense, because if it was decided that you had the right to work in silence, the neighbor would have to pay to play their music. Because silence to you is worth $60, the neighbor wouldn't want to pay because their utility is only worth $30. If the obnoxious neighbor stopped playing their music all together because of the cost, then essentially you would be getting silence for free, which is unfair to the neighbor. Similarly, the government weighs the outcomes of imposed taxes on big business externalities.

Taylor Bye, Chapter 4, Question #5

The two fundamental rules of conversation at a cocktail party have been repeated for ages: 1. Never talk about religion and 2. Never talk about politics. The government and its numerous triumphs and failures (more latter than former, but I digress) have been touchy subjects for, well, ever.

Wheelan writes that government can make or break an economy and there is quite a fine line between those extremes. There are fanatical monopoly governments, otherwise known as dictatorships, that have managed to stifle their economy and fall apart like the USSR. There are other extremist governments, like those of North Korea and Cuba, that have not fallen on their faces into financial ruin but have not thrived as economic super powers, which they strive for in their oppressive manners.

Taking these examples into consideration whilst voting is invaluable to the American nation. When I turn 18 and gain the right to vote, I am determined to watch campaigns, do countless research and watch every presidential debate possible so that I can choose whom I think will lead this nation to economic prosperity and security.

Griffin Pontius chapter 3 question 6

       In chapter 3, the opening paragraph was very amusing to me.  Being a person who really appreciates cars, I could complety understand the authors want for cup holders, but also having the ability to get passed that. (For example, if you want to have cup holders in a new Lamborghini, that's an extra $500, not kidding) However, the truly amusing part came when he writes, "we bought a Ford Explorer and became part of the problem for all those people driving Honda Civics.*" While this in and of itsself, is not all that amusing, as my eyes followed the page downward I read, "*When our Ford Explorer rolled over at 65 mph on an interstate three years later, we bought a Volvo." I laughed to myself, because when I had initially read about the purchasing of a Ford Explorer, I seemed to vaguely recall a couple stories about Explorers being top heavy.
       To tie this in with the reading, while the author talked about the negative extranalitys of driving a big car; the author never talked about the initial externality of driving on both the people in the car and the pedestrians.  While yes cars can get you from point A to point B, they pose a very dangerous threat upon pedestrians and other drivers alike.  However the positives of having cars easily out weigh the negatives in the realm of private and social costs.

Taylor Bye, Chapter 3, Question #6

In this chapter of Naked Economics, I found it particularly interesting that things like beautiful architecture are considered positive externalities. When Wheelan looked out his window at work and saw the awe-inspiring Wrigley Building and Tribune Tower, he didn't pay for it's upkeep or renovations but enjoyed the benefit of their beauty.

What surprised me even more was the claim that smoking was actually a benefit to society. When I walk past someone smoking on the street and get a fresh whiff of that stale cigarette scent, I definitely never think of social security benefits, yet that is what Wheelan points out.

This chapter really revealed how most of all our actions are externalities, both positive and negative. This encourages me to think more about every decision I make and how it's going to affect not only myself but the community around me.

Peter Webster, Chapter 3, Question 2

Right away in Chapter 3 Wheelan talks about his move from a Honda Civic to a big Ford Explorer. He talked about how his decision to buy a car more efficient for his new family affects everyone else in the environment. Wheelan says he does not have to compensate for asthmatic children who will struggle even more due to the exhaust he generates while driving. "And I have never mailed off a check to people living on small Pacific islands who may someday find their entire countries underwater because my CO2 emissions are melting the polar ice caps." This passage directly relates to me. I drive a big car that probably has the same effects as Wheelan's Ford Explorer, but I have never thought about that until now. When my parents looked for a car for my sister and I, I'm sure the effect the car had on the environment was one of the last things on their mind. They were probably just scared they were going to have two of their kids driving around on their own. So, when picking out a car they want to buy a safe car. That just happens to be a big car that is bad for the environment.

Darby Quast, Chapter 3, Question 6

While reading chapter 3 a topic that I found interesting was property rights.  To illustrate this, Wheelan used the example of the neighbor Stuart who is fond of playing the bongos.  The way this situation works out really depends on who has the "right" to what.  If you say that Stuart has the right to make noise, the other person will pay for silence.  If the other person has the right to silence, Stuart will end up paying them to make noise.  Who values what more will also be a factor.  Although property rights worked out this challenge, in the real world it is a little more complicated.  For example, the issue of Carbon Dioxide emissions.  Do I have the right to drive whatever kind of car I want? Do I have the right to drive it as much as I want? Or do other people around the world have the right to tell me to stop.  Because it is so unclear, the government has to get involved to solve anything.

Max Hobrough Chapter 3, Question 6

In chapter three Wheelan describes what positive and negative externalities that we face every day with most decisions that we make. Also in this chapter Wheelan tells us how and why it is either good or bad for the government to be in the economy. What really intrigued me was that really when you look at the outcomes of public goods that the government has backed away from and put into private hands we tend to fail, well these being very expensive at least. All of these which of came back to the government are such things like research for diseases and illnesses, law enforcement, and  public parks and recreation areas. The all have good impacts on society but nobody seemed to want to take fiscal responsibility for these programs because of all of the "free riders" who are paying nothing but benefiting from these programs. The author gave a great example of how something is private and stays private, Wikipedia, this is just run through outside donations from people who want to actually pay for this service. The reason for the authors point here is that instead of the government having to keep Wikipedia alive he would rather see the taxpayers money go to something more important like national defense. These basic goods are just used and used until the funding runs out for them because they don't wanna pay for what seems like a minor expense, but once you have massive amounts of people doing this there is no more service because nobody can pay for it. This whole idea of government being a bad thing in the economy is really subjective to how it is being used to help the people.

Gunnar Nelson, Chapter 3, Question #2

A topic in chapter 3 that is most applicable and involving myself personally, is Wheelans argument about fuel emissions and large SUV's. In my family, trucks have always found a use. My family, as well as the country use trucks for multiple different uses. I do not believe that trucks are such a significant negative externality that Wheelan perceives it to be. 

In this chapter, Wheelan is argueing from one side of the debate. I agree with the facts regarding the gas mileage of trucks, and the "gas guzzlers" that they are. However I believe that trucks are of a necessity on multiple levels. Agriculturally trucks are needed to haul and tow, you simply cannot get the towing capacity that you need from a Honda Civic. Trucks are a necessity for material transportation, from food, to animals, to industrial products trucks are needed, and we have not found a substitute for these needs. On the road, trucks are safer on snow, give more security to the modern craziness on highways which provides protection for the driver. 

Wheelan proceeds to talk about substitutes for trucks, such as solar powered technology. From what I have heard and researched, solar technology would be a very expensive "investment." I believe that increasing Co2 in our atmosphere is a severe problem, but our focus should be allocated more significantly to power- house corporations that send even greater amounts of gases into the air. Current day, we do not have the liberty of simply switching to an electric truck, and I believe until that day, our focus should be directed to another problem.

Madison Webster, Chapter 3, Question 6

A passage that stuck out to me in chapter 3 was the topic of inertia. Wheelan mentions a book called Nudge by Richard Thaler in which he says, "...our decisions are often a product of inertia"(78). Wheelan basically says that we as humans, make decisions based on what we get stuck in due to lack of change and movement. He gives the example of insurance coverage. If an employer puts us under an insurance plan when there are 6 other options, we are likely to stick with the one we were put under. Another major example is organ donation. In the US, we choose whether or not we want to donate our organs once dead. If we don't indicate this choice, no organs will be taken. However, in other countries such as Spain, France, Norway, and Israel, organs will be taken from a person unless noted!! I chose this topic about inertia because I thought it was interesting how people get trapped in loopholes but simply make no effort to remove themselves. I believe the government has too much control in these other countries. Organs should not be taken from people simply if they forget to indicate "no" or don't know they have the choice.

Jona Bakke, Chapter 3, Question #5

The question of income distribution is discussed in this chapter. Wheelan compares the economy to a pie. The government could distribute income evenly and lower economic growth, which would equal "a smaller pie more evenly divided" (Wheelan 75). Or, without income distribution, some people would be very wealthy while others are left quite poor, which would lead the average income to rise and the economy to grow. (This would create a bigger pie that is not evenly cut into pieces.)

There are many different opinions on this issue, and Wheelan states that the subject is more philosophical than economical. Most liberals believe that it is most important to help the desperately poor by providing them evenly distributed money. Wheelan reminds the reader, however, that "a growing pie, even if unequally divided, will almost always make even the small pieces larger" (Wheelan 76). And conservatives only appear interested in growing the economy. I think it is important for the government to focus both on helping to grow the economy and on working to help those suffering from the effects of poverty; I would fall somewhere in the middle of the liberalist and conservative ideas on this issue.

Sophie Gunderson, Chapter 3, Question 4

In Chapter 4 of Naked Economics, Charles Wheelan focuses mainly around the extrernalities and how the government can deal with them in various ways. An example that was highly focused on by Wheelan and thus stuck out to me was the proposition of raising taxes on gas-guzzling cars to raise the production and driving of fuel-efficient cars. Not only are the people who are driving Hummers on the daily basis adding more onto the existing pile of emissions in the atmosphere, but they are also creating negative externalities for most of the world. However, the government would need to implement these taxes and that's something that is difficult for the government to pin down. How much would they need to tax exactly and if this tax is put into place, would it damage the people who need these trucks the most? Although solutions to these problems seems obvious, the actual success behind them seems difficult to achieve.

Overall, this chapter brings up the largest (global warming) and seemingly smallest (shared walls) negative externalities that exist in this world and discusses the challenges that the government and economists face I'm trying to fix them. In the long run, these problems should be addressed no matter how difficult because the present, no matter how important it seems at the time, is not always the most helpful thing to focus on. 

Julia Carle, Chapter 3, Question #2

This chapter was mainly talking about externalities, and how they affect people that may not even know it affects them. Wheelan showed me that these externalities do affect me in some way, shape or form even though I may not know it. I learned or got a more detailed description as to what an externality is exactly, it's people, places, or things thing indirectly are affected by someone's choice, lifestyle, purchase, etc. As an example of an externality to everyone, Wheelan brought up global warming and smoking. Global warming because of people's choices we all suffer, same as smoking. If one person smokes around us, we suffer too. By Wheelan giving these examples, I realized that there are a countless number of externalities that affect me in my everyday life, externalities that I don't even know about.

Maddie Binning, Chapter 3, Question #2

The issue presented in the latter half of this chapter, the question of how people react when presented with automatic coverage/options was raised. For instance, the example of employees accepting whatever health insurance coverage their employer automatically assigns them displays how people often don't pursue alternate options. This is an issue that directly affects the lives of everyone, including myself primarily in the long term. It is a reminder not only to not accept things at face value, but also to analyze the economic options presented to you. More often than not, the easiest course of action is the one chosen for you. However, this may not be the best option. The concept of inertia factors largely into economic views involving the government, as shown by the question of "opt-in" or "opt-out" organ donation. This means that while citizens may think they prefer less government involvement, when things are chosen for them, it may be better for them and for society as a whole for the government to become involved in the economy.

Nathalie Heidema, Chapter 3, Question 6

There are three passages that were interesting or struck me. The first one is the various solutions to negative externalities. For example, children on airplanes are a negative externality for the people sitting nearby them. The parents do not pay the full cost of the cost they put on the other passengers. In fact, babies on board travel for free. The solution of economists would be to make families with children stay in the back of the plane. 

The next is the sad reality of plants that release CO2 (e.g. in the US) and cause floods in other parts of the world, or other emissions that cause acid rains. These companies or firms definitely do not bear the full cost of pollution or damage they create.

The passage with smokers was quite shocking to me. At first, when I was reading about the negative externalities of smokers, it seemed all obvious and well-known to me. But when Wheelan said that smokers actually do us a favor I was shocked. And indeed, the fact that smokers die young ( circa 7 years earlier than no smokers) make us enjoy the benefits of Social Security or private pensions more (than they do). In fact, the government of Czech republic saves $28 million a year on pensions and old-age housings because of the death of smokers.

Rita Hammer, chapter 3, question 4

Wheelan starts off by talking about negative externalities in chapter 3. I found it interesting and worrisome that "markets alone fail to make us better off when there is a large gap between the private cost of some utility and the social cost." The statement says that everyday by driving and manufacturing we are contributing to an issue that will never fix itself. This creates a need for ideas that can reverse the damage we contribute to every minute of every day. As I enter college, this issue alters decisions that I will have to make when deciding what career path to go down. Someday the issue of carbon dioxide emissions, as well as many other negative externalities have to be fixed; however, it isn't until the gap between private cost and the social cost of behavior gets so high and threatening that people actually get the incentive to fix the problem. Economics proves that negetive externalities aren't going to fix themselves, leaving society with a demand for innovation. Why don't we fix the problem before it becomes impossible or irreversible?

Elena Gutierrez, Chapter 3, Question 4

In the beginning of chapter three Wheelan gives examples of both positive and negative externalities. Litter in public places was one of the examples that Wheelan gave for a negative externality. The over all public cost of litter is higher than the private cost of the person who litters. Wheelan wrote about an interesting solution that the Mayor of Chicago, Richard Daley, attempted to impose. Daley believed that  if he instilled a litter tax (1 cent for every $2 of take out food purchases) then there would ultimately be less litter. To me this was a great way for Wheelan to tie in what chapter two was about (incentives) with externalities, and how incentives can be used to correct externalities. It is clear to me that Daley thought he could use the incentive of high taxes to correct the litter problem in Chicago.

Jonathan Webb, Chapter 3, Question 2

     Negative and positive externalities are issues that definetly affect our lives. Whether it's the nice view of a lake when walking around it or people smoking cigarettes or using gas gussiling cars, they affect our daily lives. Externalities can affect us both directly and indirectly. By just using the examples in the book, smoking cigarettes, that affects you directly by inhaling the 2nd hand smoke. Then you have your hummers or other poor gas mileage cars who affect the earths atmosphere and can contribute to global warming (if you believe in it). Another quick example of a externality indirectly affecting you can be someone who is sick, and they don't wash their hands throughout the day. Sometime in the day when you both our eating lunch and he hands you some food which you eat, he just raised the chances of you getting sick very high. Positive and externalities happen every day. And it's kind of like the direct or indirect effect, it can affect you now and in the future. The most important thing Is to figure out how we deal with these externalities; what's the best way of dealing with the positive and negative.

Harris Worthman, Chapter 2, Question 6

Chapter two of Naked Economics revolves around the idea of incentives. Good incentives, bad incentives, and poorly executed ways/means of achieving incentives. One passage that stuck out while I was reading was the part about the mass pollution above Mexico City and the unfortunately unsuccessful response the government took to help decrease it. "A new law required that all cars stay off the streets one day a week on a rotating basis" cars would be tracked by their license plate; however, this backfired and those that could afford two cars, had two cars. They would switch cars on the day they weren't allowed to drive. Even though the incentives of the government were fair and "good" the incentives of the citizens were not. Why is that? Because people just generally suck. Our personal incentives are far more important to us then the long term consequences of our actions. We, as humans, naturally don't think of the future and instead look for the options that we have that are more convenient to us. The government should have implemented better form of transit and a heavier punishment. If convenience made people act selfishly it can make them act responsibly as well. The punishment may be "All heavy polluters shall be castrated." The citizens will then weigh their options and realized that it is far more convenient to take the bus/subway/light-rail to get where their going then the alternative.

Kiera Ziegler, Chapter 2, Question 6

In chapter something that really stuck out to me was the when he mentioned teachers salary.  I agree that teachers salary system is not functioning in the most productive fashion. I have heard plenty of stories from my parents about a teacher not behaving in a respectful maner towards the student or the teacher is not helping the students perform to their full potential. Even though this teacher may not be great, if they are in the union and have been working there for a while it is very difficult to fire them and on top of that, they are most likely recieving similar pay. As Wheelan brought up also in the chapter, this teacher, because of those benefits, also may not have an incentive to become a productive teacher. I would disagree with one part of Wheelans arguement however. Most teachers that go into teaching have acknoledged that teachers are not payed that much and that everone is paid smiliarly. A few teachers may leave in the first year but many people do not go into teaching for the money they go into teaching because that is their passion. Regardless, however, there could be a better system to paying teachers and a better payment system may result in better teachers and teachers that feel the need to improve themselves.

Peter Webster, Chapter 2, Question

In the second chapter, the thing I found most interesting was the idea of creative destruction. Wheelan had a good example of it when he talked about the the farmers. "At the beginning of the twentieth century, half of all Americans worked in farming or ranching. Now that figure is about one in a hundred and still falling" (Wheelan 47). Wheelan goes on to say that we have not starved to death, and we don't have a 49 percent unemployment rate. Instead, people are able to go out and create new things instead of working in farms all day. Technology has become so productive that we no longer need as many people doing the same things anymore. This means people like Steve Jobs, Oprah, and Steven Spielberg are able to do their own thing and further improve the economy.