Bad Taste Is An Externality. Now What?
by Virginia Postrel • Jun 26, 2007 at 4:59 pm
A (somewhat) recent post by Greg Mankiw and the subsequent comments thread demonstrate just how elastic the handy concept of externalities can be:
You don't have to go all the way to the Edvard Munch example to find people declaring their neighbors' aesthetic choices "visual pollution." And even someone as tolerant as I am has limits. (Here's a bona fide artwork I'd find it intolerable to live near.) The offended often claim that the neighbors' bad taste is driving down property values. There's rarely much evidence in individual circumstances, but since people do pay extra to live in associations that, among other things, regulate asthetics, the argument isn't entirely fallacious.
I addressed this topic at length in chapter 5 of The Substance of Style (excerpt here). One aspect--neighborhood conflicts over paint colors--is the subject of myJune Atlantic column. (Link good for three days.) As I argued in this NYT column (and in the book, though not the excerpt), the best thinking on the general issue is Ronald Coase's classic paper, "The Problem of Social Cost," which has a more complex message than the usual one captured with the term "the Coase Theorem" and represents a devastating critique of the simple Pigouvian formula.
There is no way to please everyone, which is why it's best not to try. Allowing people to sort themselves is one step toward resolving the dilemma. Another is to eliminate cheap talk--not through a strict Coasian bargain, which is rarely possible, but with enough trouble and expense to eliminate frivolous enforcement (or frivolous violations.) In this Dwell article (in two parts, one page each), I looked at some examples of reasonably effective hodge-podge solutions--though, as the Atlantic column suggests, uncertainty itself can lead to conflict.
Spillovers are a fact of life in close quarters, and, as Coase pointed out, usually the objectionable activity has some value of its own. As a reminder that conflicts are nothing new, and that bad paint jobs are a relatively minor annoyance, here's a passage from Giorgio Vasari's Lives of the Artists that explains how Sandro Botticelli dealt with a problematic neighbor:
Comment on this item
Buy Virginia's Books
Copyright 2013 Virginia Postrel. All commercial rights reserved.