Saturday, May 19, 2012

Public Goods

I was sipping my coffee down at Brooks Landing today in the halcyon sunshine, watching the other users of the public space: a guy covered in tattoos fed the ducks, several out-of-shape joggers huffled past, a college student and her mom nibbled at their breakfasts.

Parks, libraries, the Jazz Fest, National Forests: all of these are public goods. Governments (usually local) tax and spend to provide citizens with goods which would be underprovided by private supply and demand. However, individual enjoyment of public goods remains (usually) a private choice. Brooks Landing is just there: if you want to use it, you must take your time, walk down there, and find your own way of enjoying it.

From casual observation in many settings, it appears to me that public goods are enjoyed more by the affluent than by the poor. There isn't anything wrong with that, as long as the public goods are easily accessed by all. In the case of Brooks Landing, it's located in a poor neighborhood - yet relatively few of the neighbors habituate the spot.

Why do the well-off love public amenities, when they could afford private alternatives, but the poor - who cannot - seem indifferent to them?

Clearly, a straightforward notion of public goods as perfect substitutes for private ones is insufficient to explain what I've observed. That approach - the simplest - would suggest that the poor would consume a lot more public goods than the rich. Another simple approach, treating private and public goods as completely independent, also fails: it would imply equal usage patterns if costs are identical. Since the time of the well-off is typically worth more, and since the poor in America have more leisure time, even in the case of additive separability of utility the poor should consume a bit more of public leisure goods.

That leaves us with the idea that public goods may be complements to private goods, and are not primarily complements of leisure time. In some cases, this makes sense: you can't use a DVD borrowed from the library unless you have a DVD player. You can't hike in a National Forest if you can't afford to transport yourself there. But a local park? Or a public festival?

Another theory, one that has some merit in a society like mine where race, class, and income tend to run together, is that the activities I am thinking about are those where one goes "to see and be seen". It might be the case that the poor have a distaste for seeing (or being seen by) the well-off, so they steer clear of public functions. With enough distaste for others, any group will self-segregate. As a white, I might simply fail to observe the enjoyment of public goods by blacks if they don't want me to see them doing so.

As always, the last resort of an economist in explaining a phenomenon is 'preferences'. Perhaps there are cultural preferences for public goods that are correlated with ability to earn income. The best evidence for this is college students. They are likely to be affluent in the future, but have little income in the present. And they LOVE public goods: college students crowd parks, love libraries, join fun activities, go hiking, crowd beaches, and generally consume far more than an average share of leisure-oriented public goods. This fits well with the simple theories of utility, and suggests a life-cycle in which a young adult will shift consumption away from public and toward private goods as his income rises.

Could the preferences of the poor be deterministic? Does someone's indifference to riverside walks, libraries, and music festivals express itself as well in an indifference toward schoolwork or saving money? That's a much trickier question.


gary said...

Keep in mind that there really aren't too many "private" alternatives to public goods such as parks. Getting a private alternative to say, the Boston Commons, would be very very expensive; nobody would rent a few acres of land for an afternoon stroll, and few but the very very rich would buy such land for occasional uses.

When it gets to land uses susceptible to congestion, do you see public/private differences. Think public golf courses vs country clubs.

DRDR said...

I was surprised by the claim "the poor in America have more leisure time." Is that true? It may be true that the poor work fewer hours and their time is worth less, but is it also true that the poor need to spend more time on home production since they don't have access to as many time-saving appliances or services? See, for example, the 18 May 2009 Washington Post article "The High Cost of Poverty: Why the Poor Pay More."

Also, I believe library usage tends to skew more towards poor & middle-class than the affluent. Wealthier citizens can buy books/DVDs or get Netflix subscriptions. At least that's my sense of a library like Robbins in Arlington Mass. But you may also have a larger share of citizens using a library in a wealthy suburb like Carlisle, so I'm not sure what dominates.