Imagine that I say that everything costs me a million dollars in value. Maybe there’s a sense in which it’s true—I’m just really sensitive. Still, it doesn’t seem fair to give me that level of disproportionate influence.
This is a good argument for why it’s hard to measure external costs by asking people. It doesn’t undermine the definition.
And the situation isn’t quite as bleak as you imply, in terms of measurement. We have techniques, such as revealed preference, for measuring costs when people have incentives to lie. We also routinely, in the legal system, apply estimates of “reasonable” costs for things.
This is a good argument for why it’s hard to measure external costs by asking people. It doesn’t undermine the definition.
And the situation isn’t quite as bleak as you imply, in terms of measurement. We have techniques, such as revealed preference, for measuring costs when people have incentives to lie. We also routinely, in the legal system, apply estimates of “reasonable” costs for things.