 |
This article does not cite any references or sources. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (February 2007) |
An internality is a term used in behavioral economics to describe those types of behaviors that impose costs on a person in the long-run that are not taken into account when making decisions in the present. Classical Economics discourages government from creating legislation that targets internalities, because it is assumed that the consumer takes these personal costs into account when paying for the good that causes the internality. For example, cigarettes should be taxed because of the negative consumption externalities that they impose, such as second-hand smoke, not because the smoker harms him or herself by smoking. This is because the economic assumption of rationality would pose the argument that the smoker has taken into account the damage that smoking does to himself, but still desires the cigarettes more than the long-term health.
 |
This economics or finance-related article is a stub. You can help Wikipedia by expanding it. |
This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)
