> That's not an externality. The person starving to death is the same person who didn't buy insurance.
It is an externality. Maybe you don't mind having the streets of your town full of homeless people, but I do. In fact, I mind it very much. When someone ends up on the street, that makes my life less pleasant even though I'm not the one who was uninsured.
That's the kind of thinking that leads to old policies like New York City rounding up all the homeless and putting them on a bus with a mandatory one way ticket to Pennsylvania.
The person taking the brunt of the hardship is clearly the person suffering it and not the person with the misfortune of having to observe them, and they also have the best incentive to take steps to prevent that from happening. Forcing choices on them doesn't fix it. Maybe it makes it so you don't have to look at them, but if the net result is sufficiently worse that they wouldn't have chosen it given the choice, you're not actually helping them, you're just making the suffering less visible.
> Of course that is true. That doesn't mean that the cost imposed on others is zero.
It's never zero. But you're making it out to be a significant cost relative to the effect on the person making the decision. Having a way to internalize the cost of others' displeasure at being aware of their possible misfortune wouldn't materially affect their decision one way or the other, because it's so much smaller a factor than the possible misfortune to begin with.
For an individual, yes. For society as a whole, no. If you have one homeless person on the street who is seen by 1000 passers-by, their discomfort on an individual basis has to only be 0.1% as much as the homeless person's in order for the aggregate cost to be the same. This is just the tragedy of the commons in another form.
It's still true even with that kind of multiplier. Would you rather see a homeless person a thousand times, or be a homeless person? It's no comparison.
But you're making a fine argument for charity. If a thousand people don't want to see a person go homeless, it doesn't take much from each of them to make it so they don't have to.
That's the wrong analogy. The correct one is: would you rather be one poor person living amongst 1000 wealthy people, or one rich person living amongst 1000 poor ones?
And if 1000 is not a big enough number to make you think twice, then make it 10,000. Or 100,000. (The number of homeless in the U.S. is considerably larger than that BTW.)
> And if 1000 is not a big enough number to make you think twice, then make it 10,000. Or 100,000. (The number of homeless in the U.S. is considerably larger than that BTW.)
You're comparing the entire US homeless population to one person. The actual ratio is less than one in five hundred.
It is an externality. Maybe you don't mind having the streets of your town full of homeless people, but I do. In fact, I mind it very much. When someone ends up on the street, that makes my life less pleasant even though I'm not the one who was uninsured.