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PHILOSOPHY - Rational Choice Theory: What are Public Goods? [HD] - YouTube
Channel: Wireless Philosophy
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(intro music)
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Hi! My name's Jonny Anomaly, and I teach
at Duke University and UNC Chapel Hill.
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Today, I'm going to talk
about public goods.
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Consider the following case.
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In representative governments around the
world, citizens are periodically called
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on to vote for parties or candidates.
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In large elections, many people choose
not to vote.
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But among those who do vote,
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each faces the choice of how much time
to spend gathering and processing
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information about the candidates.
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Since each person's vote is unlikely
to make a difference to
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the outcome of an election,
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and everyone knows this, there's little
benefit to voters of trying to overcome
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bias or increase general knowledge
about the relevant issues.
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The expected benefits of gathering and
processing information are diffuse,
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but the cost is concentrated on the
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individual who has forego other
way of spending his time.
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In other words, informed voting is a
public good in democratic societies.
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Goods are public when they
exhibit two properties:
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nonrivalry and nonexcludability.
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Nonrivalry exists when one person's
consumption of a good doesn't diminish
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other people's opportunities
for consumption,
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and nonexcludability exists when
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nobody can be excluded from consuming
a good once it is produced.
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Ordinary goods that we
purchase in a market
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are private, in the sense that once we own
them, we can do what please with them,
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within the limits of the law.
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For example, when i buy a surfboard,
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I could choose to ride it, keep
it stored in my closet,
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or sell it to the highest bidder.
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But since public goods are available
for everyone to consume,
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it is difficult to get people to
voluntarily provide them or conserve
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them once they've been provided.
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When I cast an informed
vote for a candidate,
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I make that candidate just a
tiny bit more likely to win,
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but the legislative consequences of the
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candidate's victory are
shared by all citizens
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and potentially people in other
countries and future generations.
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Because, for many people, it is
psychologically costly to invest energy
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engaging in serious research rather than
idle gossip about the candidates and
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issues at stake in an election,
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the public good of informed,
unbiased voters is undersupplied.
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They are two separate impediments to the
voluntary provision of public goods:
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the free rider problem and
the assurance problem.
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Free riders are people who
seek the benefits of a good,
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but who try to avoid paying for it.
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Other people face the assurance problem,
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which occurs when people are willing to
pay for a public good but are unsure
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that enough others will contribute
to make their effort worthwhile.
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one way to solve the assurance
problem is by introducing
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altruistic punishment, which occurs when
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people are permitted to
punish free riders.
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The prospect of altruistic punishment
can help increase contributions to
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public goods especially well for small
groups in which people can bear
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retribution for being identified
as a free rider.
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Assurance contracts are another way
of producing local public goods.
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Consider Kickstarter, an internet company
that allows people to contribute to an
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outcome that everybody in a group wants,
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but which doesn't collect contributions
until enough people donate to reach the
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threshold needed to fund the good.
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For example, we might use Kickstarter to
fund a tennis court at a park that many
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people in a neighborhood visit.
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Public goods that are global and
intergenerational, though,
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are much more difficult
to provide or preserve.
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Antibiotics are an example
of a powerful drug whose
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efficacy declines as their use increases,
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especially when they're used
at subtherapeutic doses
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or misused to treat infections that
they lack the power to cure.
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Preserving the power of antibiotics
to cure infections is a public good
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because effective antibiotics are a
nonrival, nonexcludable resource
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whose benefits spill across borders
and across generations.
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Assurance contracts are
useless for cases like this,
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because the transaction costs associated
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with bargaining between billions
of people are too high.
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So we need more subtle ways of preserving
public goods like antibiotics.
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One way to approach the problem is to
convert public goods into private goods
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by increasing the extent to which
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each consumer internalizes the benefits
and costs of using antibiotics.
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For example, someone suggested that user
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fees should be applied to the
consumption of antibiotics,
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with the revenue being used to fund
basic science research that will
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stimulate the development
of new vaccines,
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new kinds of antibiotics, and technology
for diagnosing infections.
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It is worth distinguishing a
related set of principles.
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The problems of producing public goods,
solving collective action problems,
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and avoiding commons tragedies
are often similar in structure,
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and many introductory textbooks diagram
all three problems as prisoner's dilemmas.
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But this isn't quite right.
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In a true prisoner's dilemma, the
non-cooperative action is always taken,
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since a prisoner's dilemma is defined
as a non-cooperative game
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with a unique Pareto dominated
Nash equilibrium.
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In other words, in a true
prisoner's dilemma,
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cooperation is never
the rational move.
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But in public goods games, rational
people often contribute.
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I want to end with a question:
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if wifi is a public good, why is
it being privately provided?
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