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Tyler Cowen’s Expansive Definition of Externalities

Summary:
Jeff Bezos can spend his money on himself, or he could give it to other people, so they could spend it on themselves. If he opts for the former, this is a clear-cut negative externality. Right? I think most economists would agree that that is a terrible argument. And yet, it seems to be what Tyler Cowen says, regarding old people spending their own money on themselves before they die, rather than passing it on to others. David R. Henderson shares my confusion.

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Jeff Bezos can spend his money on himself, or he could give it to other people, so they could spend it on themselves. If he opts for the former, this is a clear-cut negative externality. Right?

I think most economists would agree that that is a terrible argument. And yet, it seems to be what Tyler Cowen says, regarding old people spending their own money on themselves before they die, rather than passing it on to others. David R. Henderson shares my confusion.

Robert Murphy
Christian, Austrian economist, and libertarian theorist. Research Prof at Texas Tech and author of *Choice*. Paul Krugman's worst nightmare.

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