Let’s focus on an example, if I pay 64 cents for a cigarette, and believe the pleasure I get from smoking it outweighs the price, then I might choose to smoke it, ignoring other factors such as advertising or addiction. But there are more than non-financial costs at play here such as the health costs that may occur as a result of smoking. However, cigarette manufacturers don’t pay for any of the non-financial costs, so there is no need for them to raise prices to cover a financial (a.k.a. health) burden. The smoker, or the health system, will pick up these health and other non-financial costs.