The Business Ethics Blog

Last month I blogged about the story of a shopkeeper in a small town in England who had found an innovative way to get customers (mostly kids) to take responsibility for litter. (Here’s that blog entry: Taking — And Enforcing — Responsibility for Litter.) Soon after, I was interviewed about the topic by CBC Radio. Here are some further thoughts that came out of that interview.

My opening paragraph from last month bears repeating, because it lays out some basic economic ideas:

Litter is a classic example of what economists refer to as a “negative externality.” A negative externality is basically a cost, resulting from a transaction, but imposed on people not party to the transaction. Voluntary transactions are efficient when all the costs and benefits are borne by those who are part of the transaction. When others are forced to pay costs, that means the buyer isn’t paying the full cost of the good, and so too much of that good is likely to be purchased, from a social point of view. Economists call that “inefficient.” The rest of us call it annoying, and unfair.

The idea that litter results ultimately from a transaction between a buyer and seller is important. When we ask “what can we do about litter?” it’s important to identify it as an unwanted outcome of a transaction between two parties. To some extent, that means that the rest of us can essentially put the responsibility for litter on the buyer/seller duo. So rather than ask what the right solution is, one option is to say that litter, like many other forms of pollution, is a problem foisted on the rest of us by a buyer/seller duo, and that that duo has the responsibility to fix the problem. In other words, what’s the solution to candy bar wrappers in the street? I have no idea. But I’m justified in being angry about it, and candy sellers and their customers need to figure it out. It’s their shared responsibility.

Now, to say it’s a shared responsibility doesn’t mean that it’s shared equally. My local convenience store can’t be totally responsible for what I do with a candy-bar wrapper once I’m out the door and far away. And as a consumer, there are limits to what I can reasonably be expected to know about the waste-reduction efforts of the people who package the foods I buy.

Also, it’s worth considering that, even though we might consider litter the shared responsibility of buyer and seller, we (society) still have the option of imposing penalties if the buyer/seller can’t figure out, between themselves, how to (literally) clean up their act. Where that penalty is best applied — to the buyer or to the seller — is likely to vary depending on the case.

Finally, it’s also always worth looking for (though not always possible to find) win-win solutions (or win-win-win solutions, ones that are good for buyer, seller, and society). I suspect that the practice by some coffee stores of offering a discount to people who bring a reusable mug (and who therefore don’t use a paper cup) is an example. Stores reduce the amount of cups they go through in a day; consumers save 5 or 10 cents per cup of coffee, and society benefits from a reduction in the number of cups going into landfills, a reduction in (potential) litter, etc. People who can find & point out those kinds of solutions are making a real contribution.