Which of the following is an example of a positive externality?

• A. Vaccination reduces disease transmission.
• B. Smoking near others.
• C. Littering in a park.
• D. Noise pollution.

Answer: (A)

Positive externalities happen when an action by one person creates a benefit for others that the market doesn’t pay for. Vaccination does this neatly: when someone gets vaccinated, they not only reduce their own risk of disease but also lower the chance that others will catch it. This spillover benefit, including herd immunity, means society as a whole gains more welfare than the individual’s private benefit would suggest. Since the market price and private decision don’t capture this extra social benefit, vaccination stands out as the clearest example of a positive externality.

The other scenarios involve costs or harms to third parties rather than additional benefits. Smoking near others can impose health costs on bystanders, littering harms the communal space, and noise pollution reduces others’ enjoyment or productivity. These are negative externalities, not positive ones.