Externality is an impact on a party that is not directly involved in the transaction. There are many examples of externalities, be it positive ones or negative ones.
Here in Singapore, there are also exampeles of externalities. Education might be one of the most important key to any Singaporean.Everyone is required to at least attend 6 years of primary school. Education in Singapore is a positive externality to the society.
Firstly,it benefits the workforce.People would be more competent as they go up the ladders of education. By enrolling into any instituition after secondary school,they learn valuable lessons that would help in their working life. For example, a student taking the business and social enterprise course would be a valuable asset to the future of social enterprises in Singapore.
This benefits the workforce as there would be professionals specialising in the line of work, creating a more holistic workplace,which in return would create a more competitive and professional workforce. Secondly, with education, there would be lesser negative impact on the society. By empasizing on the importance of education, students would think of their future and stay in school instead of dropping out,
mixing with bad company and in return creating a negative effect on the society by involving in crimes and unlawful acts.That is why i think education in Singapore is a positive externality.
by istianah
Labels: externality
We Loved7:48 PM
Central Provident Fund - A Positive Externality
An example of a positive externality in Singapore is the Central Provident Fund (CPF). Referring back to theory, the Marginal Social Benefit of the CPF equals the marginal benefit of the CPF holder and marginal external benefit derived by the people around the CPF holder.
Part of the monthly salary of full time working Singaporean citizens is channelled towards the Central Provident Fund (CPF). This fund aims to give Singaporeans more financial security in the later part of their life. At the age of 55 years, they are then able to withdraw the money to see them through their retirement. While they are still working, they are able to use their CPF to pay for housing loans and their children’s education.
In relation to the private benefit, this ensures that each working individual will have money set aside to clear pending house loans. The CPF also proves to exert less stress on people nearing retirement as they are assured that the money would come in handy. With financial independence, they are able to stay healthier with less stress and burdens on themselves (and of course their families). In addition, they are able to better take care of themselves in old age, can afford to visit the doctor regularly and cure themselves if they get sick.
Referring to the social benefit, fewer burdens is weighed on the government and tax payers as less
resources are channelled to help pay for the medical bills and daily needs of the retired. Moreover,
paying school fees using the CPF ensures that the child would have a higher chance of staying in
school as savings are chalked up on a consistent basis. Education raises one’s productivity and
increases earning capacity and standard of living. At the same time, lead to an increase in productivity of
other workers working in the same company. With education, their children are inculcated with good morals and are able to find jobs that pay reasonably well and in turn support them (parents) while they are in retirement. It is an additional private benefit when their children support them during retirement as they have an alternative financial support.
Therefore, the Central Provident Fund has proven to be a positive externality.
Melissa
Labels: externality
We Loved3:56 PM
Gamble all your riches away!
Gamble all your riches away!
One negative externality is the result of the vicious cycle of gambling. With the smell of the Integrated Resorts (IR) getting stronger, we can place our scenario in that setting.
An individual enters the casino with an entrance fee of $50. As he gambles, the money spent would be costs to him as well. The entrance fee and all the money he pitches in to gamble would be his private cost.
When his gambling gets out of hand, the debts he owes will be additional private costs. This would affect his family who did not participating in any gambling activities, resulting in an external cost for them. They did not pursue the gambling activity, but the family’s finance would be in hot soup.
It would affect their purchasing power, the ability to pay for utilities, their children’s education expenses and be a burden upon the family. The external cost that falls upon them would be having no utilities at home, inability to maintain their children’s education, etc. Although the debt would have to be paid by the gambler financially, the negative side effects add on as external costs for his family.
In summary,
Private marginal cost (private MC):
For the gambler, the entrance fee ($50), including the money and risks that he will take like debts and bankruptcy.
External cost (XC):
His family who experience financial problems, the possibility of becoming bankrupt, side effects of inability to pay fees and bills (education, utilities, phone bills). The society may also be affected should he break the law by stealing or getting into trouble with illegal debtors.
Social marginal cost (Private MC + XC):
The cost to the gambler (financially, job loss), and his family who is affected by his debts. Should there many people getting into debts, bank who have loaned money to them will also be affected as these individual are unable to return the money. This is alike the situation where banks are draining out (or becoming bankrupt) due to loans for companies going bust. These situations that pile up become factors that make the recession more severe.
Done by Glory
Labels: externality
We Loved3:40 PM
Singing Karaoke at Home.
Sometimes, i would get to hear neighbours singing loudly, blasting their karaoke system away during the day. This is a form of negative externality. Neighbours are forced to listen to their singing, whether is it nice or awful.
It is a form of negative externality is because we did not pay for the usage or enjoyment of the karaoke system but are forced to suffer from the loud music it provides.
Let's say, mr Sing pays $500 for the karaoke system, and when he sings loudly, as time to come, his hearing will be affected, therefore a $100 for his hearing aid. His bills every month ? Maybe $20 more.
So, his total cost is $600, plus a marginal cost of $20 for every monthly bill.
Mr Listen did not pay for the karaoke, but lets say he paid $1000 for the tv. The loud music Mr Sing created caused Mr Listen to be unable to hear the tv program he is watching. Mr Listen got a few options.
He can switch off his tv and do other things.
He can buy headphones so he can hear.
Lets say he buys the headphones
Cost of that, $20( headphones)+ $2( bus fare)+ $100( long usage will cause him to affect his hearing, so hearing aid in the future )= $122
Mr Listen will have a "loss" of $122.
He suffered from the negative externality of the karaoke system.
done by: shawnald
Labels: externality
We Loved3:30 PM
iPods, Decibels and Externalities
Occasionally, I would get to observe some interesting happenings while traveling on MRT trains. Sometimes, there are couples, on the train, behaving intimately and absorbed into their own contructed reality. And there are also people listening to their favourite music on their iPods or MP3 players. In addition, there are also people who have to tolerate listening to music 'forced' upon them by fellow commuters listening to their iPods, standing or sitting in close vicinity. I am not trying to suggest here that those listening to their iPods are sadistic who love to impose on others the music they like. However, I believe, in the attempt of trying to cancel out the noise of the train moving on the tracks and also the noisy chattering of other commuters (and thus, being able to better appreciate the music playing on their iPods) people listening to their iPods may have played their iPods too loudly so much so that the music they are listening to are audible to their fellow commuters (I have met with one extreme case in which I was able to hear loud and clear what the person beside me was listening to on his iPod).
While listening to their iPods at high decibel maybe enjoyable for the listener, it may inflict negative externalities (external cost) on people around the listeners who feel that they are seemingly ‘forced’ to listen to the music, as they may find the music they are ‘forced’ to listen annoying or irritating, and hence decrease their enjoyment of travelling on MRT train.
To illustrate, assume that on a fictional scenario there are only two passengers on a train: Ms. Melody (listening to her iPod at high decibel) and Mr. Wolverine (who is 'forced' to listen to the loud music until he alights the train).
If Ms. Melody lowers the volume of her iPod to a level that would only be audible to herself and not to Mr. Wolverine, their enjoyment of their ride on the train would be the same, assuming all other things being equal.
On the other hand, if Ms. Melody continues listening to her iPod at a volume which makes the music she is listening audible not only to herself but also to Mr. Wolverine, it might result in a decrease of Mr. Wolverine’s enjoyment of the ride (as Mr. Wolverine might find the music annoying and irritating) and hence, inflict a negative externality on him. At the same time, Ms. Melody enjoyment of the ride might increase. The increase in the level of enjoyment might be due to being able to enjoy the music without having to listen to the noise of the moving train and noises from other sources.
The follow illustrates the enjoyment levels, in monetary value*, of the two passengers when Ms. Melody is listening to her iPod at low decibel and also at high decibel in monetary terms.
*Assuming we could assign a value to the enjoyment level of the two passengers in the scenarios described above.
At Low Decibel At High Decibel
Mr. Wolverine’s Enjoyment of the train ride | $20 | $10 |
Ms. Melody’s Enjoyment of the train ride | $20 | $50 |
In the table above, it can be seen that Mr. Wolverine’s enjoyment of the ride has decreased by $10, in other words, Ms. Melody’s act of listening to her iPod at high volume has generated an external cost of $10 on Mr. Wolverine.
Since, lower the volume of her iPod would also cause her enjoyment of the train ride to decrease, Ms. Melody has no motivation to lower the volume on her iPod, even though listening to her iPod at high volume inflicts an external cost on her fellow commuter.
However, things can be made better. Ms. Melody can offer Mr. Wolverine $20, for allowing her to continue listening to her iPod without lowering the volume, and hence increasing his enjoyment of the ride to ($10 + $20) $30 (which is better than when Ms. Melody had lowered the volume on her iPod). In addition, Ms. Melody get to continue enjoying the music on her iPod without lowering the volume. Both Mr. Wolverine and Ms. Melody are better off than when Ms. Melody had simply lowered the volume on her iPod. A win-win situation if you asked me.
By Zhi Qiang
Labels: externality
We Loved10:59 PM
A negative externality is road congestion which in turn brings about many other negative problems such as the traffic congestion. When more and more people start to buy cars, it will come to a point beyond whereby additional road user (driver) will cause third parties to incur some costs as the road started to get congested.
When this happens, the people in the cars as well as the people(third parties) on the public transport will be stuck in the jam in the peak hours in the morning at expressways. As such, the employers of these drivers will suffer productivity loss due to them coming in late. The employees will also be in a difficult situation whereby coming in late for work puts them in a bad light. Students who are going for their lessons will also be affected by the traffic congestion. Not only will the students' attendance be affected, they will also suffer as they will miss the lessons that the lecturers has already begun with. This in turn might affect their exams.
done by: Chia Sing Yee, T02
Labels: externality
We Loved10:56 PM
Externality
The recent mass food poisoning case at the Geylang Serai Temporary Market is an example of an externality in Singapore, and in this case, a negative externality. When we talk about negative externality, we are referring to "a cost of an activity that falls on people other than those who pursue the activity (Frank & Bernanke, 2007). In simpler form, it otherwise means that an activity originally carried out by you not only impacted yourself but others who were not involved in this activity.
In this situation, the Indian rojak stall located at Rojak Geylang Serai had a price to pay for the food poisoning incident. Two women have died, 48 patients hospitalised, one woman who was two months pregnant miscarried and a over 146 cases of food poisoning has been reported (Ong & Low, 2009)
It may be due to the poor hygiene practices or improper food practices carried out by the workers of the rojak stall that caused this incident. With regards to this incident, the Indian rojak stall was not the only stall affected. In fact, parties who were not involved in the food poisoning case were inadvertently affected as well. All stalls were affected as the entire market had to be close down for inspection by the National Environmental Agency (NEA). Customers who were intending to make a trip down for a meal at the market had to eat somewhere else.
Stalls lose businesses due to the shut down, and this implies a loss of revenue. To some, this might not be an issue for them but to those whose income is solely based on this stall business, their livelihood is affected. In other words, these stalls were not involved in activity (food poisoning incident) yet they have to suffer the cost of being closed down for inspection.
NEA has stepped in to improve hygiene standard. There has been intentions to penalise stalls with grades Cs and Ds. Once more, other stalls are being affected as well.
Mabel Ong
BZSE T02
Labels: externality
We Loved10:22 PM
The pots and plants that your neighbors placed outside the corridor is one negative externality. This is because; there are chances that your neighbors might forget to clear the water and leaving them to turn stagnant. Or they might have stagnant water present in their houses too. We are aware that stagnant water is the best condition for Aedes mosquitoes to breed. The more they breed, the more possibility that there will be more Aedes mosquitoes biting us. Aedes mosquitoes can cause Dengue fever and might lead to death if serious. It is also a fact that there is no cure to serious Dengue cases.
This creates a negative impact or external cost on people living in that area. People who are diagnosed with Dengue fever must be under close monitoring during the critical period of a week. Dengue is also contagious. In such cases, opportunity cost would be incurred such as causing the patients to miss school or work. Also, they must spend money seeking for medical help. The neighbors who are responsible do not share the cost of the medical bills or the patient’s opportunity cost at all. In worse scenarios, they do not share the cost of losing one’s love. If many people are contracted with Dengue due to the negligence of neighbors, there will be higher demand in medical help. These are extra costs that they must fork out themselves even though they were not the ones responsible.
However, this problem can be solved if everyone is willing to spend one minute of their time every few day to check and clear stagnant water in their houses or along the corridors. This simple action will not cost anything but might help save lives.
By Cynthia
Labels: externality
We Loved7:25 PM
Smoking is a negative externality in Singapore, as it does not only have an effect on the smoker’s health, but it affects the entire society. Hence, by imposing taxes on cigarettes, our government will reduce these impacts. The act of smoking brings about an external cost to the society as it leads to air pollution, worsen the health condition of the people surrounding and as they are exposed to secondhand smoke, causing risk to the non-smokers.
Environmental tobacco smoke is a major source of air pollution particles, therefore, the health’s condition of the people surrounding will worsen, and our society would be affected as it would put a strain on our medical resources as the demand for medical help increases. This means that there will be an increase in medical expenses, where this money can be put to a better use.
Smokers hold a responsibility to themselves and society. Smokers aren't the only ones being harmed by their habit. Cigarettes are known for causing cancer and lung problems. Second hand smoke affects everyone surrounded in that atmosphere, especially the children. Non-smokers who breathe in secondhand smoke take in nicotine and other toxic chemicals just like smokers do. Non-smokers exposed to secondhand smoke are at least 80% more risk of stroke than do the non-exposed people.
Thus in order to minimize these impacts, Singapore governments impose taxes on cigarettes, and polices such as banning smoking in public areas, advertisements informing smokers the harmful effects of smoking and events are being held to help smokers quit smoking are implemented to deal with the market failure. As a result, people would be healthier, healthcare would be cheaper and our air would be cleaner.
In conclusion, the prevention of smoke will provide a healthy environment.
By Apple:)
Labels: externality
We Loved7:20 PM
Externalities- CHERYL :)
Externalities occur when a party pays for services but the external environment or other people benefit from it. An example of externalities in Singapore is the Electronic Road Pricing (ERP) system. It is an electronic road toll system to ease congestion on the road. Singapore, a small city which experiences rapid industrial growth, has a problem with urban traffic congestion. The Land Transport Authority implemented a usage-based taxation system to counter the problems caused by traffic road congestion.
Basically, Singapore drivers who don’t have to urgently get to their destination would not take that route and go from another direction. How the ERP system works is that it charges drivers and motorists for using the roads in certain areas of Singapore at the peak hours. Charges are put on the drivers who use the restricted roads. The results have shown that the ERP system is indeed helpful in curbing the problem of traffic congestion in the urban areas of Singapore. Land Transport Authority (LTA) released figures that showed that within the restricted zone itself, traffic has gone down by about 13% during ERP operational hours, with vehicle numbers dropping from 270,000 to 235,000.
The ERP system is a positive externality because it benefits many others by charging individually. The amount paid is a flat amount, multiplied by the number of times that individual vehicle passes through the gantries. This creates a situation where drivers diversify their timing to travel to work so that they can minimize spending on the road tax. Accompanied with taxes that have to be paid when buying and maintaining a car, it is positive when one takes into account the reduced pollution emitted and lesser traffic jams on the road.
A negative externality was also produced with the introduction of the ERP system. Drivers who wished to avoid being charged for using the routes during the peak hours turned to other ways to get to their final destination. As a result, other roads became overcrowded and there were traffic jams there instead of the ERP-roads.
Labels: externality
We Loved5:10 PM
Externality
The externality I choose to elaborate on is the free wireless service that is provided by Infocomm Development Authority Singapore (IDA). This is a wireless programme developed by Singtel, Qmax and iCell by deploying wireless broadband network in Singapore. It is free of charge for users in Singapore and all they have to do is to register an account.
The positive benefits that the free wireless service brings are that people are now able to gain access to the Internet while they are mobile. Students get to enjoy services like instant messaging and online gaming and even get to research on their school projects in public. Business people and working adults can easily clinch deals in public and be easily contacted through emails as they are now able to access them freely. And, while enjoying all these benefits, they do not have to pay communication groups like Singtel, M1 or Starhub for mobile broadband fees which could cost up to S$72.76 a month.
Hence, in conclusion, this externality that the IDA provides brings many benefits to the public.
by Shine. :)
Labels: externality
We Loved9:53 AM
Complimentary Tickets to 'Common Cents' Production
NP HMS has been given 18 complimentary tickets to theVoice production 'Common Cents'!
Please ask Dr Red for a ticket! The show's details are as follows:
Date: 3 May 2009, Sunday
Time: 7.30 p.m.
Venue: Alliance Francaise de Singapore, 1 Sarkies Rd Singapore 258130
For more information, please click on the following link.
http://thevoice.com.sg/productions.html
We Loved2:41 PM
April 2008