Public Goods and Private Goods: Who Gets to Use It?
Some things everyone can use at once and nobody can be kept out of. Learn to sort public goods from private goods with two simple questions.
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What this means
Here is a slice of pizza. You eat it. Now it is gone. Nobody else can have that slice, ever. And the shop would not have handed it to you if you had not paid.
Here is something very different. A country's army protects the whole country. It protects you. It also protects your neighbor, and the family three towns over, and the person who just moved here yesterday. All at the same time. And nobody can pull one house out and say, "not you."
Those two things work in opposite ways, and that is the whole idea in this lesson.
A public good works like the army. Everybody gets it together, and once it exists, you cannot keep people out. Flood protection is like this. A wall that holds back the river protects the whole town at once. You cannot build it to skip one house.
A private good works like the pizza. One person uses it. When they do, it is not there for anyone else. And you have to pay to get it.
You can sort almost anything with two questions.
Question one: can lots of us use it at the same time without using it up? Question two: can someone be kept out if they do not pay?
Pizza: no and yes. One person, and you must pay. Private. Clean air: yes and no. We all breathe it together, and nobody can stop you from breathing. Public.
Now here is the tricky part, and it is the real reason this matters. If nobody can be kept out, why would anyone pay? Most people would just wait and use it for free. So a store cannot really sell flood walls to a town one house at a time. That is why public goods usually get paid for by everyone together, through taxes.
Why it matters
Look at your day. The streetlight on your corner is on for everyone walking by, whether they paid or not. Your headphones are yours alone, and you paid for them. You have been using both kinds all along without a name for them.
This is also the honest answer to a question kids ask a lot: why do we pay taxes? Some things simply cannot be sold one person at a time. You cannot sell a person their own private supply of clean air, or their own personal piece of a flood wall. Those things only work if everybody chips in.
Real-world example
Think about a fireworks show a town puts on in a park. The town pays for it. People who came to the park can see it. But so can anyone standing on their own porch a few blocks away, and anyone looking out a window. There is no way to build a wall around the sky. Compare that to a movie ticket. The theater can absolutely keep you out if you did not pay, and the seat you sit in cannot hold anybody else. Same town, same night, two completely different kinds of goods.
Try it
- Make two big signs. One says PUBLIC GOOD. One says PRIVATE GOOD. Put them on opposite walls.
- Write these on cards, one per card: national defense, flood protection, clean air, pizza, an automobile, a movie streaming account, a streetlight, a bicycle, a lighthouse, a pair of shoes, a public park, a sandwich.
- Ask the two questions for every card, out loud, in this order. Can many people use it at the same time without using it up? Can someone be kept out if they do not pay?
- Have a student carry each card to the correct wall and say the reason before letting go of it. The reason is the assignment, not the wall.
- Keep a third spot on the floor for cards the class cannot agree on. A public park is a good one to fight about, since anybody can walk in, but a crowded playground really can run out of swings.
- Test one card the hard way. Take the streetlight. Try to invent a way to sell streetlight service only to people who paid. Someone will suggest turning it off for non-payers. Ask what happens to the people who did pay.
- Now do the same with the bicycle. Try to make it work like a public good, where everyone rides it at once and nobody can be kept off. Notice how fast that falls apart.
- Add three cards of your own from your own town. Sort them, and write one sentence for each explaining your choice.
- Write your best answer to this question: if nobody can be kept out of a public good, who pays for it and why?
Teacher note
The two questions in step 3 must be asked in the same order every single time, because the whole skill is the routine rather than the answers. Insist on the reason before the card is placed, since a student can sort correctly by memory or by copying a neighbor and still have nothing. The dominant misconception is that public means owned by the government and private means owned by a company. A public swimming pool that charges admission is a useful counterexample, because the government runs it and yet people can absolutely be kept out. Steer students to the two questions, not to who owns it. The second misconception is that free means public; a free sample at a store is still a private good, because one person eats it and it is gone. Step 5 matters more than it looks, since real goods sit on a spectrum, and letting the park be genuinely contested is more truthful than forcing it. Steps 6 and 7 are where the concept becomes physical, and step 6 usually produces the lesson's best moment when a student realizes you cannot switch off a streetlight for one person. Step 9 connects this to taxes, and it is enough for students to reach the idea that everyone paying together is the only way some things get made. A student has it when they can apply both questions to a brand new example you invent on the spot.
Check yourself
Which of these is a public good?
What are the two questions that help you sort a good as public or private?
Why is it hard for a business to sell a public good like clean air?
If everyone can use it at the same time and nobody can be kept out, it is a public good, which is why we pay for those together instead of one at a time.