What are externalities?

Externalities are when one person’s actions affect someone else, usually without them knowing it or paying for it.

Imagine you have a toy that makes loud noises. You're having fun, but your little brother is trying to sleep. The noise from your toy is like an externality, it affects him even though he didn’t ask for it.

Sometimes, the effects of externalities can spread far and wide. Like when you ride your bike through a park and leave a trail of dirt behind. You’re having fun, but the next kid who rides through has to deal with the messy path. That's like a shared space problem, one person’s action affects others in a place they all use.

Sometimes people don’t even realize they're causing an externality. Like when you and your friends throw a big party, and you leave all the trash on the floor. You didn’t think about cleaning up, but now the next group of kids has to deal with the mess.

Externalities are like invisible ripples in the pond, sometimes you make a splash, and someone else gets wet! Externalities are when one person’s actions affect someone else, usually without them knowing it or paying for it.

Imagine you have a toy that makes loud noises. You're having fun, but your little brother is trying to sleep. The noise from your toy is like an externality, it affects him even though he didn’t ask for it.