externalities.
The health of a company's employees is an externality to them. If half their workers get lung cancer 10 years down the track, it costs them nothing, so they have no incentive to take that into account.
From a non-externality-related perspective, social factors come into play, too: Few resteraunts will want to lose all their smokers by banning smoking. Most people don't smoke and don't really like it, but don't dislike it enough to leave just because of a smoker. So the end effect is that every place allows smoking, and on average everyone is less happy and healthy because of it, just not quite enough to leave. |
