I am in debt to Economics for many reasons, but this week I’m especially grateful. From Tuesday to Friday, I battled an aggressive virus due to which I ended up in the hospital and student health a total of three times, was hooked up to an IV to receive intravenous fluids twice, and was given lots of pain meds. On Wednesday night, my roommates drove me to the emergency room. I was severely dehydrated and in serious pain, but the ER was crowded, so after briefly seeing the doctor, I was left on a hospital bed behind a curtain and told to wait with an IV that wasn’t connected to fluids or pain meds. As the pain and dehydration worsened and the minutes ticked by for a half hour, I called to the nurses through the curtain, but was always told that the medication was coming...in a minute. I was starting to give up hope, as I had heard horror stories of waiting hours in emergency rooms, which seemed to be perpetually overcrowded and understaffed.
When my moans of pain prompted a nurse to remind me to press the call button and be mindful of my noise level out of respect to the other patients, I was mortified that these involuntary expressions of pain were affecting other patients...but then the economist inside me realized that I had leverage. I thought back to Coase and realized that these moans of pain were a negative externality—an involuntary expression of my sickly status.
The situation was virtually economically ideal, as the assumptions of the Coase theorem were nearly completely satisfied. We had almost perfect information (although we didn’t know exactly how quickly or how effectively I, and therefore the moans of pain, would respond to the medication), and property rights were also clearly delineated, as the doctors were clearly the ones possessing the medication and as a patient, I had a right to stay in that bed until I received care. I knew that the key to Coase’s theorem was that regardless of whether or not I was at fault for the externality (could I be blamed for my aggressive virus?), if the social marginal cost of my moans was less than my social marginal benefit as a producer (this isn't a perfect example, but as a patient in an ER, I was producing nothing other than my own human life that the doctors had determined was worth preserving), then we would come to an agreement to remedy the externality through a bargain that presumably would involve the pain medicine entering my IV.
Without any further bargaining, I was given a dose of medication, and after a few more minutes of suffering was sweetly and silently asleep. Thanks to Coase and his solution for coping with externalities, I was able to get through the night—and even slept through a screaming patient with a broken leg next to me whose screams, I was later told, were a negative externality much more concerning.
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