Charging for consumption of public goods.

by Harry on December 11, 2006

This is the first year that we’ve contributed to the local NPR affiliate. I listen to NPR a fair bit, and so does my wife, but, unlike her, I’d happily do without it myself. It enhances my life, but not in a way that I value enough that I would pay if they turned it into a subscription-only service (she made the contribution, then, obviously).

I probably spend a similar amount of time listening to BBC7. On my new website I mention that it could have been dreamed up just for me – the best of BBC radio’s irresponsibly depleted archives, and an old school friend of mine is their best presenter; a joy. I’d be embarrassed to admit how much I’d be willing to pay if they made it subscription-only.

So, what if some super-national governmental agency decided to charge me to pay for the enjoyment I get from NPR and BBC7? Would I have a reasonable complaint against it? Just to put one issue aside – I wouldn’t complain, in either case. But I think I would have a complaint in one case and not in the other. I’d have a complaint in the case of NPR because my relationship to NPR is like that of the shoemaker to the elves. They do something nice for me, which I enjoy, but I didn’t ask for it, and if I’d been offered the choice between paying for it or not getting it at all, I’d have chosen the latter. But BBC7 is quite different; not only do I plan around it, but if I’d had the choice between paying for it and not getting it I’d have chosen the former (at an embarrassingly high price).

So, I don’t think I’ve any complaint if they charge me for BBC7 but I do if they charge me for NPR. To say this is different from saying that the people who, in fact, pay for BBC7 and NPR, have a complaint against me if I don’t contribute. Suppose (counterfactually, but to keep the focus where I want it to be) that both are paid for entirely voluntarily by people who are producing them just for themselves and I only get the benefit from them because they don’t know how to exclude non-contributors. If the contributors are securing what they want at a price they are voluntarily paying, it might be a bit oafish of me to consume it without contributing when I could, but it is hard for me to see that I am doing something unjust to them. So my intuition is that even though there is no injustice when I do not contribute to the production costs of BBC7, there is no injustice, either, when I am forced to contribute as much as or less than I would have voluntarily contributed in order to secure access if that were the only way of doing it.

Am I right about this? I’m sure that David Schmidtz says something about it in The Limits of Government, and even surer that Tyler Cowen does in his wonderful In Praise of Commercial Culture, but some bugger walked off with my copies of both! And I’m impatient to hear your thoughts.

I’ll write a follow-up post explaining what this post is really about in a week or so.



otto 12.11.06 at 11:44 am

I dont know what this post is really about but you are touching on a broader issue which has interested me for a while, which is how to determine when someone is ‘free-riding’ or not. Take the example of Europeans ‘free-riding’ on US defence expenditures in the Cold War. How can we determine whether this is indeed ‘free riding’ as opposed to having a different set of preferences about the utility of defence expenditures(a different military-industrial complex, etc) which they would have stuck to even if US spending had been reduced to European levels, even allowing for the argument that such preferences for less defence may be at times endogenous to the behaviour of other states?

In other words, there are lots of situations where it’s very difficult to tell whether there is free-riding or just disagreement about whether the public goods in question should be produced or not.


P O'Neill 12.11.06 at 11:45 am

I think there’s an overlap of technological and economic issues here. The purchase of any product may involve paying more than the seller would have accepted to make the sale, and different consumers end up paying the same price for a product even though the degree to which they wanted it could have varied quite a bit — but they all wanted at least enough to buy it. So a fee for access to radio is no different in the sense that it’s not clear how they price it so that every consumer pays exactly what they “want” to pay while making it a viable and simple pricing model to use. Of course with the BBC licence fee, some pay for a service that they’d rather not have at all. With NPR, some pay zero for a service that they’re happy to have.

As for BBC7, there is an alternative — I wonder if this is where you’re headed. Because BBC7 is digital delivery, the BBC could start charging overseas listeners for it. I suspect that BBC management is sitting on one or more proposals for US pricing of their streaming service, involving ideas such as a platform on XM or Sirius for all their radio (and not just Radio 1 as now), or stand-alone subscriptions to broadband customers.

One final thing. I think the US blew digital radio. They tacked it onto a financial model that was already dubious — the NPR begathons or the news mcnuggets plus annoying ads of commercial radio, and used a technological standard that no other country was using. They could have jump started it by using the UK standard, and there would have been a huge selection of cheap digital radios ready to sell here — at least the listener base would have been bigger than it currently is. Now they’ve got the technological capacity to add lots more content — such as, ideally, BBC via DAB, but no one is listening because the sets are too expensive. Does the US radio industry have any economists?


Ben 12.11.06 at 11:54 am

I’m not sure quite which part you want to know is right, but I take it your claim is “I don’t think I’ve any complaint if they charge me for BBC7 but I do if they charge me for NPR”.

That seems fairly reasonable. The situation’s not quite like Nozick’s famous public address system, however. You choose to tune in to NPR, thereby accepting the benefit. It doesn’t seem you’d have any complaint if you had the choice between paying or not being able to tune in (e.g. it’s made subscription only).

I take it your complaint is to a government making you pay for the opportunity, whether you want it or not – much like us BBC licence payers (assuming you have a TV anyway, you must pay for licence whether or not you want Radio 7). in this case, you seem to have a complaint I feel.


Mike M 12.11.06 at 12:31 pm

Could not get past the first senrence. Harry must not have paid federal taxes in his life. NPR is funded by the Federal Government so any discussion of free rider issues and I expect further analysis is open to discussion


Aaron_M 12.11.06 at 12:51 pm

Your argument seems to be of the form: 1) if, hypothetically, I would pay for X, then 2) it is morally legitimate for an actual political authority to force me to pay for X. But 2 does not follow from 1. I may very much want to have sex with Angelina, but this wanting does legitimise Angelina actually forcing me to have sex with her (OK OK, lets just imagine that in the move from the hypothetical to the actual I go crazy or something). I may be willing to pay Angelina for sex but she cannot claim that my having sex with her and my hypothetical willingness to pay for sex amounts to justifying her in actually charging me post-sex when I accepted her advances under the premise that they were free of charge. In no way did my actually having sex with her indicate my actually consenting to pay for this service, even though hypothetically had she asked me to pay I would have paid (OK OK, lets just imagine that in the move from the actual to the hypothetical I become the kind of guy that would pay for sex). So I can’t understand how the state would be justified in charging you for the BBC7 when you listened to it under the understanding that it was free of charge. I mean the UK does not even pretend to expect non-citizens to contribute. Maybe this new global state could argue that you on a go forward basis are expected to pay, but how does the fact that you are also willing to pay bear on the justifiability of the global state’s coercive act?

In general I do not understand the distinction between the NPR and the BBC7. It seems to me that they are either both the kinds of public goods that a global state would be justified in charging for or that neither of them are the kinds of goods for which the state is justified in taxing individuals. The only other option is to identify some morally relevant difference between the NPR and the BBC7, but the fact that you like one and not the other is not relevant. A workable argument for the idea that the state is justified in using coercion to provide public goods is based in the claim that the good could not be provided if there was no state coercion and that the good ought to be provided, i.e. following some kind of normative reasoning. If the BBC7 cannot be provided without the state forcing people to pay, the reason must be that those that are willing to pay do not cover the cost. Thus to justify state coercion what we need is an argument justifying forcing those that do not want to pay for the BBC7 to pay, and any such argument would almost certainly apply to the NPR as well meaning that the state would also be justified in forcing you to pay for it. Alternatively we can imagine that the state is only justified in forcing us to pay for things that we all presumably want but where, because of the non-excludability of the good, we are able to free-ride on others’ contributions. But again, your wanting to pay for the BBC7 does nothing to convince me that it is the kind of good the all presumably want and thus the kind of good the state is justified in using coercion to finance the good.

John A. Simmons has a very strong argument against using hypothetical consent to justify forced contribution to public goods, i.e. he rejects hypothetical consent theories of political goods provision as being justifications with the same logic as actual consent. For a very effective summary of Simmons argument see the beginning of, Wellman, Christopher Heath. “Toward a Liberal Theory of Political Obligation.” Ethics 111, no. 4 (2001): 735-59.

Some other sources:
Klosko, George. Political Obligations. Oxford ; New York: Oxford University Press, 2005.
Simmons, A. John. “Justification and Legitimacy.” Ethics 109, no. 4 (1999): 739-71.
———. Justification and Legitimacy : Essays on Rights and Obligations. Cambridge ; New York: Cambridge University Press, 2001.
———. Moral Principles and Political Obligations. Princeton, N.J.: Princeton University Press, 1979.


abb1 12.11.06 at 1:07 pm

Those who pay the piper order the tune. By contributing to your local NPR station (or withholding your contribution) you affect their programming choices. That’s your justice right there.


Matt Kuzma 12.11.06 at 1:45 pm

Your logic applies to bootleg recording of music concerts as well, since the concert was paid for by the concert-goers (provided the band wasn’t planning on selling a recording of the concert). The same can be said of any paid event. If the recording of the event isn’t being sold by any of the involved parties, then the event is a self-contained equitable exchange. To record that event and sell copies is doing no harm to anyone.


harry b 12.11.06 at 1:57 pm

mike m — the subvention provided by the taxpayer accounts for very little indeed of the funding of NPR. 20%? Someone here will know exactly no doubt; but if it depended on what it gets from the federal government no-one would listen to it. I pay a lot of tax (but not as much as I would if the tax code were fairer).

Others — I’m thinking about your points.


Rich B. 12.11.06 at 2:23 pm

In the olden days, I contributed to my local Public TV and Radio station (despite the fact that they have two different people call you, the TV and radio money are all going into the same pot.)

The kids liked Sesame Street, and I liked Masterpiece Theatre. Now, with cable, there is Nick Jr. and the Learning Channel for the kids (with just a few commercials at the end, indistinguishable from Public TV’s non-ad ads), and a lot of artsy cable stations for me. I just don’t feel like public TV is irreplaceable anymore, so I don’t give.

I also have XM radio, which now has some public radio shows (but not All Things Considered, for example, which I listen to after work). I bet if NPR ended, something (or things) comparable would pop up on pay or commercial services. Or maybe I’d start listening to BBC radio.

Calling stations like BBC or NPR “public” is really a mis-nomer. They are, essentially, for the high-brow (or upper-middle brow) listeners — a demographic that used to be small enough that it could support itself without government support.

Now, it is becoming less necessary to fund through the government. Probably needed for another 20 years or so, but beyond that . . .


James Gary 12.11.06 at 3:11 pm

I am in a similar position. As much as possible, I try to acquire goods and services for free–by shoplifting, theft or simply not paying the bill– whenever I can get away with it. Unfortunately, some providers of goods and services have taken measures which make it impossible for me to do so–for example, the phone company simply refuses to provide service unless I pay for said service in a timely manner.

So I naturally feel deep sympathy for your plight.


John Quiggin 12.11.06 at 3:44 pm

How you bundle things makes a big difference here. Assume that the amount you’d pay for BBC7 would cover your cost of the whole BBC. Then, it seems reasonable to say that its just to charge you this amount and support the BBC. Going the other way, note the BBC7 itself is a bundle, including some things you like and some you don’t.


leederick 12.11.06 at 3:47 pm

Isn’t this just a relatively simple point about preferences?

If Harry is willing to pay $X for access to BBC7, then it doesn’t matter whether he pays $X for access to BBC7 as a private good or the same amount for access to BBC7 as a public good. In either case he satisfies his preference by getting BBC7, and pays what he would be willing to part with for it. He is better off than he would be if he could not get access to BBC7 for $X.

However, as he is willing to pay $X for something other than access to NPR, he could complain were he made to pay $X for NPR. He does have a preference between private and public provision here. Public provision would prevent him from fulfilling his preference to spend his money on something else, and would make him worse off.

Or am I missing something?


abb1 12.11.06 at 4:13 pm

They are, essentially, for the high-brow (or upper-middle brow) listeners…

They are for those who contribute. In new New England they are upper-middle class with a lot of BBC and nuanced liberal political coverage. Some stations are playing nothing but blues or classical music; and in Berkeley, for example, they play jazz and things like Democracy Now!

To whatever extent it’s paid by the contributions, it truly is a listener’s driven form of radio, unlike the commercial stuff. If you don’t like it, you shouldn’t contribute; you’re not supposed to.


Brandon Berg 12.11.06 at 5:02 pm

Is this about the inefficiencies created by using IP laws to restrict consumption of nonrivalrous goods by those in the tail of the demand curve?


Eric 12.11.06 at 5:16 pm

I’m glad that now that the toilet seat issue has been solved that folks are now using their big brains to figure out the best way to think about public radio.

Are these really the issues that folks like to think about?


Rob 12.11.06 at 6:03 pm

This is about whether coercion is legitimated only by claims of justice isn’t it? You want to show that it isn’t necessary to for it to be required to provide a good or service to legitimate coercing people to provide it, right?


Kenny Easwaran 12.11.06 at 7:06 pm

This is how I feel about my wireless internet. I pay for it, but I don’t really see that it’s a bother for me if other people use it (since they don’t disturb my download rates much), so I leave it open. And despite living in a largeish apartment building in downtown Berkeley, where a dozen or so wireless networks are visible at any time, I’m pretty sure that mine is the only one without password protection.


dr 12.11.06 at 8:38 pm

Who is this they that is going to force you to make these payments? Presumably we’re talking about a (more or less) democratic regime of which you are a citizen. It seems to me that being forced to pay in these cases is analagous to being forced to obey any other law, so I don’t see where you have a complaint in either case.


radek 12.11.06 at 9:03 pm

I too have trouble understanding exactly what it
is you’re saying. But the following strikes me as wrong headed:

But BBC7 is quite different; not only do I plan around it, but if I’d had the choice between paying for it and not getting it I’d have chosen the former (at an embarrassingly high price).

So if NPR cost you 1$ per year automatically deducted from your paycheck in 12 installments, you’d balk? It sounds like you’re just saying that you don’t value NPR all that much and so don’t feel bad about not contributing to it. But you like BBC7 enough to have pangs of guilt about not contributing to it.

In an ideal world the charge for public goods would be proportional to a person’s valuation of that good with the sum covering the costs of production. Of course this requires that whoever sets these charges knows exactly how much every relevant person values the good, which means that there’s an incentive to misrepresent one’s valuation (NPR? What’s that?). There’s a huge literature on how to get at a efficient/just solution (or second best) in the face of this ignorance. Pivotal consumers, mechanism design, price discrimination etc.
In practice NPR (I don’t know much about how BBC7 does it) funds itself by turning donating to it into a status good. Which is why you get a mug or a t-shirt or whatever so that you can let the world and all your office coworkers know what a decent enlightened intellectual you are. Which means the ones who donate are the ones who really like it, who really care about this particular kind of status and those whose conciencse won’t let them sleep at night.


Charles Winder 12.11.06 at 9:55 pm

I’m pretty sure you’re already supporting NPR just by listening to their advertisements, just like any commercial station. You don’t think Target and ADM voluntarily “underwrite” NPR programming out of the kindness of their hearts, do you? The whole ad-free claim is silly, especially since the type of marketing that NPR does is much more subtle than your average FM station (Let us tell you about the ten best Gizmos/Books/Wines/Mutual Funds to give your friends and family for Christmas! Just for your information of course).


nick s 12.12.06 at 5:42 am

Americans who consider the BBC highbrow have probably not been exposed to BBC THREE.

My take on BBC7 is that it’s essentially a sunk cost in terms of content, albeit with some residual costs. The stuff in the can has been paid for by licence money, and there’s no excuse in the digital era for it not to be made available.

Anyway, there’s a corollary here: the public funding model making it difficult to exploit private funding because it can’t justify rights negotiation beyond its broadcast purview. In short, I’d like to be able to pay for Test Match Special, but I can’t.


Have3 12.12.06 at 10:24 am

OK – so what about taxes and the so-called “benefits” shared by all – from police protection (a no-brainer)to funding of the military complex (more problematic). I would much rather choose which things to fund as that would give me more immediate control, but we have to settle for trying to express our preferences through the political process.

So what about funding a local playground (through taxes) that I no longer use but am happy exists because I think that communities should have them. I also think we should have NPR so I send them money. If I change my mind on either of these things I can’t have much effect on their existance, but I feel better about being able to stop those contributions.


sanbikinoraion 12.12.06 at 10:33 am

Why not send the BBC a cheque if you like it so much?


Uncle Kvetch 12.12.06 at 1:46 pm

I probably spend a similar amount of time listening to BBC7. On my new website I mention that it could have been dreamed up just for me

I feel much the same way about BBC6, the digital-only alternative music channel, which I listen to daily via its Internet stream. Only I’m not British, so I don’t have the option of paying for it, even if I wanted to.

Not sure what my point is either, other than to say to all the Brits out there…uh, thanks, you guys.


yo 12.13.06 at 1:21 am

There’s something in Nozick somewhere about accidentally overhearing music for a concert series you didn’t contribute to and the permissibility of listening to it. If you couldn’t help it. NPR is a bit like that.


JR 12.13.06 at 12:15 pm

Pubic radio (not just NPR) is not the sort of “good” that listeners would want to restrict to those who pay for it. I listen and pay for public radio and to my mind the more people who listen to it, the better, whether they pay for it or not. The coverage is hampered by many of the MSM vices, but at least it’s more thorough and less inclined to lunacy or idiocy than other radio news and talk. I don’t want to be part of a small coterie that has some grasp on reality- I want all Americans, whether in New York or Nebraska, to have an alternative to the Clear Channel ranters and the cable news fantasists.

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