Thanks to everyone who offered excellent comments on my last post. Most people were thinking about it the way I do. To recap, here were the questions I someday want to ask on an exam or in a job interview:
Crying babies and loud children are among the common complaints of frequent flyers; indeed, I can say from personal experience that a screaming infant can make for a long flight. Describe the reciprocal nature of the externality. How does the private market internalize the externality? To what extent does the possibility of an upgrade to first class help mitigate the externality? What is the role of reasonable expectations in deciding on a policy? What is the parent's responsibility? What is the responsibility of the other flyers?
I'm generally in the "crying baby is not an externality" camp. If you want to escape, fly private. Your tickets are cheap because crying babies fly too.
I lean toward "not an externality" for much the same reason: the bundle of rights you purchase with a plane ticket includes the reasonable expectation that there will be a crying baby or two on the plane. Question-by-question, or direction-by-direction:
Describe the reciprocal nature of the externality.
As I told my classes when I taught micro, "it takes two to tango" (NB: one of the drawbacks of teaching principles of macro is that I don't get to teach externalities). There wouldn't be a conflict about rights were it not for the non-baby passengers who are there to hear the noise. That the baby is the source of the problem isn't obvious.
How does the private market internalize the externality?
As Finch put it, "(y)our tickets are cheap because crying babies fly too." The airline--the owner of the space temporarily inhabited by the passengers--presumably capitalizes the likelihood of amenities and disamenities into the price of the ticket. If things get bad enough at the outset, airlines can also ask especially disruptive families to get off the plane.
On long-haul flights with entertainment systems, airlines themselves address the problem by passing out headsets and by providing kids' games as part of the entertainment. Even if you don't have airline-provided entertainment, you can drown out most of the noise with your MP3 player, noise-canceling headphones (which I have yet to buy but which I will probably pick up on my way home), or even simple earplugs. This probably isn't in the fine print on your ticket, but my impression is that airlines assume passengers are the least-cost avoiders of kid-related noise.
In the last few years I've flown Delta, mostly, and I should have Gold status after the first leg of this trip gets processed. I've been amazed with just how good airlines are at price discriminating. The major carriers reward their frequent flyers with better seats on the plane (closer to the front, aisle seats, etc). Gold status will mean complimentary Economy Comfort seating and more first-class upgrades.
It's also worth mentioning that one person's negative externality can be another person's positive externality. Being around other people's kids on planes reminds me of my own, so a little bit of crying is not necessarily a bad thing (do note that this relationship is not linear or strictly positive). Fewer babies on planes would make people who don't like loud kids better off, but at the expense of those who are worse off because they are around fewer cute kids.
To what extent does the possibility of an upgrade to first class help mitigate the externality?
You can drastically decrease the probability that you're seated near a crying infant by paying to fly first class, or by upgrading your ticket with frequent flyer miles.
What is the role of reasonable expectations in deciding on a policy? What is the parent's responsibility? What is the responsibility of the other flyers?
This is where things get really interesting. It's reasonable, for example, to expect that if you fly often enough you will periodically lose the Screaming Kid Lottery. That said, parents have an obvious obligation to other passengers to make sure things don't get out of hand. When we've flown with our kids--who, praise be to God, travel well--we've tried to make sure we have enough stuff to keep them occupied. I take it that part of membership in a functioning society is putting up with the occasional indignity. The occasional loud kid on a plane probably isn't worth getting that upset about.