De La Salle University

Ramon V. del Rosario

College of Business

The Decision of a Filipino to Drive a Car Going to Work Can Have a Negative Externality

in the Philippines

In Partial Fulfillment of the

Course Requirements for

Introduction to Microeconomics

3rd Term, SY 2019-2020

Submitted by:

Aquino, Jazmine Nicole

Submitted to:

Ms. Paulynne Castillo

Submitted on:

July 20,2020
I. Introduction

Obtaining a car in the Philippines is really important for most of our fellow

Filipinos because a car gives an effective and efficient way for a person to go and

travel from one place to another. This also can be a status quo for how successful you

are in your life at the moment. A car can also be a mode of public transportation that

is readily available for those who can’t afford to buy their own personal vehicles.

According to Earl that in the yearly report published by the Land Transportation

Office (LTO) a total number of 11,595,434 vehicles were recorded in the year 2018

(Lee, 2019). Moreover, according to Ceic that from the year 2008 up until the year of

2019 there is an increase in car registered every year. The quantity presented above

will be the proof that having a car is important to Filipinos due to the considerable

uses it has and also how it makes an individual life become easy and convenient.

The decision to “drive off” to work has corresponding effects that will incur in an

individual whether he may be the owner or a third-party and also it can affect the

society as a whole. This paper aims to identify the social costs of deciding to “drive

off” to work incurred on third-party particularly those non-private car owners and

society as a whole.

II. Economic Theory

This paper will tackle the type of economic theory called negative externalities.

According to Pettinger, Negative externality happens when the consumption and

production of the goods or product causes a damaging effect to a third party

(Pettinger, 2019). The example of a negative externality in a real-world scenario can

be a decision of a Filipino on driving a car off to his work. Driving off to work has a
positive benefits wherein according to Zambas driving off to work lets the owner of

the car remain his personal space personal, not time constraint, driving can be your

downtime, a place wherein you can sing as loud as you can, it is often quicker, more

comfortable overall it is more convenient on the owner side to drive a car going to

work (Zambas, 2019). While having positive benefits there will be a negative benefits

that “driving off to work” incur to third-party or non-private car owners and also to

the society as a whole.

A non-private car owner is affected by this decision because if many individual

decides to “drive off” to work there will be a bigger possibility of having traffic

congestion. Traffic congestion can occur when the service road cannot accommodate

the quantity of cars passing through it. According to a report of CNN Philippines, out

of the 416 cities surveyed around the world, metro manila took the second place

having the worst traffic congestion. (Staff, Manila’s traffic congestion is second worst

in the world, says report, 2020). As we all know, that individual especially those

non-private car owners allot so much time for them to travel from one place to

another and that allowance time that they will allot can be somehow added to the rest

time they can enjoy. Traffic congestion also result loss to some businessmen or even

workers cause the time that they are stuck in traffic can be a productive time to do

deals and even work effectively. Traffic congestion can also affect the whole society

because according to CNN Philippines that the Philippines loses 3.5B pesos a day due

to metro manila traffic (Staff, PH loses ₱3.5B a day due to Metro Manila traffic –

JICA, 2018).
 Air Pollution can also be a social cost because it is emitted by vehicle that affects

non-private car owners in a way that they can inhale the air and this can result for

them to develop illnesses. According to SpareTheAir website that long-term exposure

to polluted air can result to respiratory illnesses (Air Quality Information, n.a). Non-

private car owner can suffer to illness that is caused by long-term exposure to

polluted air. Moreover, society can also suffer in a way that this can harm the plants

and also the living species living in that place.

There is also a higher possibility of Vehicular Accidents in the roads that can also

be consider as social cost for not only non-private car owners but also to the private-

car owners too. According to Grecia that in 2018 there were 116,906 vehicular

accidents reported and in 2019 the reported incidents arose to 121,771 this give a

increase of 4.16% in the said years (Grecia, 2020). This can affect not only non-

private car owner but also private-car owner since when there is a vehicular accidents

involved there is a corresponding spending depending on how fatal it is.

III. Data Presentation and Interpretation

Figure 1. Road Crash Statistical Trend in the Philippines

road accidents in the Philippines (MMDA, 2019).

Figure 2. The Percentage of Philippine GDP loss per year due to congestion in the

Philippines

According to Figure 2, the percentage lost to the Philippine GDP due to traffic

congestion is increasing, whereas roughly Php. 3.5 billion a day is lost economic

opportunity in the Philippines (Congestion!, 2018). This can also the effect of the

increasing car registered every year since it has a big role in contributing in road

congestions.
 Figure 3. Causes of Death in the Philippines
Figure 3 shows the top causes of death in the Philippines and lead contributor is

tobacco use then second will be the total pollution then comes the total air which

compose of air pollution (GAHP, n.a).

IV. Conclusion

The researcher concludes that the decision of a Filipino on driving off to work

affects third-party and the society as a whole. In the graph presented in the data

presentation part it is visible that when an individual decided to “drive off” to work

the third party particularly those non-private car owner is affected due to the fact that

vehicles causes traffic congestion, adds up in creating air pollution, and also bring the

possibility of having vehicular accidents in a higher level.

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