4 ms·
The externalities of smoking is cheaper healthcare because most smokers die of heart attack and stroke right around retirement age.
by AngryData 1y ago
The externalities of smoking is cheaper healthcare because most smokers die of heart attack and stroke right around retirement age.
- eru 1y agoThere's lots of different externalities. Eg smoking also produces smelly smoke. Externalities also depend on context. Eg your example of cheaper healthcare only works when healthcare is priced by pooling payments. If you have a system where an actuary looks at each case individually (well, a system designed by an actuary does) and assigns a premium, then it doesn't matter what other people are doing: you are paying for your own risk (and competition between insurance providers keeps the system honest). See https://en.wikipedia.org/wiki/Prize_indemnity_insurance https://en.wikipedia.org/wiki/Prize_indemnity_insurance for a corner of that insurance market that works on the latter system. Even if you insist on pooling, you could pool smokers and non-smokers separately. Granted in many places regulations force health insurance providers to do the naive pooling where your statement can be true. Similar, or even more so, for pensions.