Definition: An unintended outcome. A consequence external to the main objective.
Origin: An 18th century word derived from external.
Why this word?
Although coined a couple of hundred years ago, this word came to new provenance in 20th century economic theories – particularly Coasian economics – as a method to explore unintended consequences. The classic example is air pollution caused by industry. It is a very important concept to be aware of, policy makers in particular. There have been some spectacular examples of it in action. For example, I had read that the mediaeval church called for a cat cull as it thought they were agents of the devil. This produced an externality in the form of an explosion of the rat population which, in turn, led to the outbreak of the plague. Way to go there, medieval ailurophobes (that’s right – two new words for the price of one!). Now for all of you historians out there – let me confess – I have never properly researched this historical nugget because I don’t want a good story to be spoiled by inconsequential details such as facts. Either way, though, it is a nice example of an externality.
Not all externalities are negative. Some can be positive – for example, bees gathering pollen unintentionally pollenate flowers. The problem with the positive externalities, however, is that they’re just not nearly as entertaining.
How to use externality in a sentence?
Use this one cautiously. It’s best to keep it in reserve for one of those moments when you are quietly trying to impress someone. If you’re trying to impress someone who cares about the environment, you can say “… and big industry doesn’t even care that they produce externalities such as pollution …” Don’t, however, use it in the bar. It would be inappropriate, for example, to tell your friend who has fallen off their barstool that the fall was an externality caused by excessive drinking. That is liable to lead to a sudden onset of broken-nose syndrome…