Why Public Goods are a Pedagogical Bad

Abstract

The concept of public goods is confusing because it confounds three analytically distinct concepts: excludability, rivalry, and public finance. Pure public goods are of limited relevance as an explanation of government spending. To make matters worse, the broader policy community uses the term in ways that invoke different means of both public and good than economists favour. For example, global public goods describe everything from the global environment, international financial stability and market efficiency, to health, knowledge, peace and security and humanitarian rights. In this essay, I argue for radically reducing the emphasis placed on public goods in the standard undergraduate public finance curriculum, and instead emphasizing the fundamental underlying issues of exclusion, rivalry, and public finance/provision. The ultimate aim of an undergraduate course in public expenditure should, I argue, be to explain government spending.