Economists define a pure public good as a good that: 1) the individual can consume without interfering with other individuals consuming the good; and 2) a good for which there is no cost-effective way of compelling individuals to pay for the good.
A public statue is an illustrative example. Bohanon can look at the Daniel Chester French statue Beneficience (known locally as Benny) that adorns the Ball State campus. Curott can view it at the same time. Moreover, it would be impractical to hire work-study students to veil the statue and charge each viewer a dollar to look at it.
Many economists argue that pure public goods are unlikely to be adequately supplied in a market context. After all, even if Bohanon is willing to pay $100 over his lifetime to gaze upon an iconic Benny statue, it is very unlikely his donation for its construction will be decisive in paying for Benny’s cost. (It is estimated the 1930 cost of Benny was $50,000, which translates to about $750,000 today.) If each person is left to his own selfish devices, no one will donate to the Beneficence Statue Fund. Everyone will try to free-ride off everyone else, even if the total benefits of Benny exceed its costs. So public statues are subject to “market failure” and will only be provided if tax-financed. Except that isn’t what happened with Benny. In fact, more than 11,000 people did donate to fund the statue that was unveiled at Ball State Teachers College in 1937.
While free-rider problems do sometimes require tax-financed provision, it ends up individuals are not as narrowly self-interested as simple economic theory suggests. Individuals can be enticed to donate for pubic goods by the lure of recognition or by the dread of shame. For-profit firms might see marketing opportunities; philanthropic organizations might see lasting impacts. Tax financing isn’t always necessary.
Interestingly, the Julian Opie electronic statue Ann Dancing that graces Massachusetts Avenue in Indianapolis is the latest test case in private financing of a pure public good. The statue is in need of upgrade and its boosters are trying to raise $262,000 by the end of June to ensure its permanent presence. Critics argue Ann has had her day and the funds could be better used elsewhere. At the time of this writing, about 47% of the funds had been raised. Free-riding or lack of public support? You decide: give or not.•
Bohanon and Curott are professors of economics at Ball State University. Send comments to firstname.lastname@example.org.