As an economics major who is arguably bad at math, I am shocked I've made it this far. When looking back at my economics career here at the University, I wondered what got me to this point successfully. My professors? Sure, they've been pretty good, but that's not it. Myself and my drive for economics? No. This happens to be my first blog post.....anyways. My peers? Yes. My peers have helped me through almost every single economics class I have ever taken - willing and able to answer every minuscule question I might have, support me in understanding challenging concepts, and being a shoulder to cry on. While I probably should have invested in a tutoring service instead of bombarding my friends, I didn't, because they could end up helping me get to the correct answer just as efficiently, without affecting my bank account.
This got me thinking about tutoring acting as a positive externality in consumption. Tutoring offers immense value to not only the students getting tutored, but their free-riding friends who reap the benefits as well (me). When one of my peers pays for and receives tutoring services , the clarification they received gets extended beyond completion of a problem set, but in making a clearer exam study guide, organizing notes, and explaining difficult concepts to friends. So, when I get clarifying answers from a peer who has paid for a tutoring service, I am also benefiting from my friends consumption of tutoring, exemplifying a positive externality in consumption.
As noted in the link, the cost of a graduate economics tutor here at UVA ranges between $40-$80, reflecting the value that is provided directly to the student who signs up for tutoring. However, I wonder if the knowledge-sharing aspect of tutoring is captured in this fee (possibly, because these tutors are obviously well versed in economics, but for the sake of my blog post, it is not). Assuming it is not, the total societal benefits of tutoring are greater than the private monetary benefit to the tutor, leading to underconsumption in tutoring services - demonstrating an example of a positive externality in consumption.
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