The individual incentives may be the necessary motivation most people, but there are additional benefits for the communities, towns, and societies that we live in as well.  In economics there are principles called externalities—both positive and negative. A positive externality is a decision made by an individual who does not reap the full benefits of that decision, but rather the greater benefit is absorbed by society. Immunizations and beekeepers are examples of a positive externality.  Immunizations, for example, help prevent the individual from a certain disease, but the rest of society also benefits because there is one less person that is able to spread the sickness to other people.

A negative externality is a situation where the individual does not pay the true cost and thus these additional costs are passed on to society.  For example, I have purchased my vehicle and I pay for the gasoline that I use, but not included in those costs are environmental costs—negative externalities.  My use of the vehicle releases CO2 emissions negatively impacting the quality of the air—a cost that I am not incurring.  The classic example is a steel mill (popularized in Coase’s Theorem) and the air pollution that it produces but does not pay for.  This is also the reason behind the proposed carbon tax in order to reduce emissions believed to be causing climate change.

Commuting on a bike addresses both of these issues.  It is a positive externality in the sense that it provides greater benefits to society through less traffic vehicles in the daily commute and improves the air quality of surrounding communities through less emissions, although perhaps marginally.  By the same token, it removes the negative externality and eliminates the additional environmental costs being passed onto society.  Thus, it is truly a habit that local governments should promote for the well being of individuals and of the greater community by providing more bike-friendly roads and streets.

[Tim S. Gehring]