Are Chemicals in Products Good or Bad for the Society? – An Economic Perspective

Humans have introduced a large number of chemical substances into products over the past century. We use the chemicals since they provide utility for the product itself, and thereby for the society. However, since many chemicals are toxic and harmful for both the environment and human health, and as they are emitted from the products during its lifecycle, the social benefits of using them are reduced. According to standard economic theory, the value of the product is equal to its price. However, in most cases the full cost of a product is rarely shown in the price of the product. Even though the product is being purchased by an individual or a company, the impact of the product will affect other than the buyer of the product. There are also unknown impacts that can affect both the buyer and the producer of the product or a third party. These impacts are in economic terminology often summarized as “externalities” (external impacts). External impacts might be negative or positive. Also, they can come in many different shapes. They are external because the affected party does not receive any compensation and the polluter does not need to pay without being obliged. This chapter gives a fast version of environmental economics needed for understanding of the topic and discusses different socio-economic aspects related to chemicals in products with the aim to give an overview of the subject.