Non-smokers living with people who smoke suffer the risks of exposure to second-hand smoke. The St. John the Baptist Parish Housing Authority wants to reduce those risks, and cut the cost of building maintenance, by banning smoking inside the agency's public properties. That's a move worth considering.
Corrections suggests that it doesn't suspect non-smokers living with people who smoke are necessarily not-well off. Specifically, we expect that any non-smokers who value a smoke-free household more than the smoker is free to pay the smoker to stop smoking in the household. Being a domestic arrangement, there are low monitoring or enforcement costs. Intra-household transfers are often present enough that every individual has an income of sorts to trade--where they may not pay in dollars, they pay through intra-household transfers, such as cooking, cleaning, television control, etc.
In this case, it appears that in all households where second-hand smoke is present, it is because the smoker values smoking more than the non-smoker values non-smoking. There does not appear to be an externality problem here. Banning smoking would seem to lower smoker's happiness, by definition more than it would increase second-hand smoker's happiness.
Coase theorem will certainly hold for inter-household smoking effects. (i.e. Smokers living next door to non-smokers in a public housing project.) I ask my neighbor not to smoke in public areas of our apartment complex and she requires me to keep quiet late at night.
ReplyDeleteHowever, the examples given are for intra-household transfers. (i.e. Smokers sharing an apartment with non-smokers.) It would be an odd arrangement for my next door neighbor to allow me to chose what T.V. channel she watches in exchange for me allowing her to smoke in her own living room.
Does Coase theorem reach an efficient outcome for intra-household effects? How about smoking in a household with pre-verbal children. The utility gained by the smoking parent may be less than the utility loss to the pre-verbal child, but with no ability to arrange for a transfer, this inefficient arrangement would persist.
.Corrections misspoke originally. We were referring to intra household transfers and contracts. Thank you for your comment, as we would not have been aware of our error otherwise.
ReplyDeleteIn any case, the Coase Theorem certainly would hold between neighbors. There appear to be no obstacles for two neighbors to enter into an easily enforceable contract for one not to smoke, or one not to play their music loudly. A steady stream of transfers each day would allow for this.
Additionally, in response to your concern about roommate or next-door-neighbor contracts, we note that roommate-to-roommate agreements exist wherever roommates exist. How are neighbors any different? Roommates come to agreements on common spaces, permissible "loud-music" hours, etc. We suggest neighbors coming to agreements is relatively simple a conjecture compared to our suggestion that pre-verbal children will be entered into contracts by their own parents.
But what Corrections was really talking about was intra-household transfers. In this case, Corrections suggests that even pre-verbal children's parents will enter into mutually-beneficial contracts with themselves on behalf of the children.
Why might this be so? We imagine a world in which parents plan on transferring some measure of wealth to their children throughout their life. However, they note, through their child's behavior or introspection or being informed by previous children-of-smokers that children don't like second-hand smoke. They therefore choose, on their children's behalf, to enter into an enforceable contract, in which they decrease their transfers to the child over the child's lifetime, and in return cease smoking now.
Therefore, Corrections disagrees with your statement that pre-verbal children will have persistently inefficient contracts--if there can be any communication or a-priori assumptions (the sort that must be necessary for this law to be valid anyway) that smoking is not desirable, parents will enter into contracts with themselves on children's behalf.