You misunderstand the term. Negative externalities implies the net externalities are negative for some 3rd party, not just that there’s any negatives. Economi

You misunderstand the term. Negative externalities implies the net externalities are negative for some 3rd party, not just that there’s any negatives. Economists don’t want to discourage net positive activities like exercise because they have some downsides. ‘People get hurt at the gym and occasionally miss work!’ isn’t a compelling argument. Frankly it’s meaningless to look at downsides in isolation, all that tells you is what scale it’s operating at. Suppose smoking retained the unpleasant odor, but the health effects where reversed so smokers and people breathing second hand smoke lived significantly longer and healthier lives. Would economists suggest taxing it more to limit how many people smoked or limit where they could smoke? Of course not even though it had some downsides in terms of odor the benefits would hypothetically outweigh them.