Public Goods Shyam Sunder Yale University MICA Ahmedabad

Public Goods Shyam Sunder, Yale University MICA, Ahmedabad, January 8, 2018

What Is a Public Good? • Non-rivalrous consumption: Consumption of the good by some persons does not reduce its availability to others • Non-excludable: People who do not pay for it cannot be excluded from using or benefiting from it

Examples and Free Riding • Very few pure public goods • But many which are almost public goods in most places: fresh air, many kinds of knowledge, national defence, language, broadcast radio or TV, street lighting, municipal parks, etc. • Public goods suffer from free-rider or easy rider problem, and therefore tend to be under -produced

Definitions Rivalrous Non-Rivalrous Excludable Private Goods Food, clothing, shoes, parking space Club Goods Cinema, private parks, satellite television Non-Excludable Common Goods Fish stocks, timber, coal, busy road Public Goods Broadcast TV, air, national defence, quiet, beauty

Important Caveat to Market Economics • Most discussion limited to private goods in competitive markets • There are important situations where pursuit of private self -interest (in markets) does not lead to desirable outcomes • For example: – Public goods • Non-exclusion of non-payers • Zero marginal cost – Monopoly/Monopsony – Information asymmetry (Lemons, agency) • It would be unwise to assume that properties of competitive markets for private goods extend to public goods or non-competitive markets. They don’t, because of free riding behavior:

Environment

Garbage

Traffic/Roads

Noise

Let Us Talk about Education • Education is, at least in part, a public good • With limited capacity, and control of admissions, it has been turned into largely a private good • But why are 40% of the positions of teachers in higher education in India unfilled • Education of teachers/scholars: expensive, need high talent, no money in it therefore under-produced

Look Closer • How Many Students in Your Classes Dream of Becoming Teachers? • What is the average quality of students who choose teaching careers? • What is their compensation and social status?

Wisdom on Education? • Urging the VCs to strictly adhere to the academic calendar, Kovind said, "Vacancies should be filled quickly and urgently. Vacancies in teaching staff are unfair on students who have enrolled, and a disservice to their education. " • Suggesting that retired professors be engaged for specific periods to fill vacancies, Kovind said that planning for impending vacancies should be done months in advance. Calling the VCs "chief executive" of their universities, the President added that as custodians of public funds, enforcing financial discipline and maintenance of accounts was "important". • "Where possible, it may be prudent to bring in officers from the central services as registrars and financial officers. This would help ensure certain standards, " he added. • President Ram Nath Kovind (Times of India, January 7, 2018)

What can be done? • To increase the quality and quantity of young talent entering teaching and scholarship? • No retirement age? • Appraisal of faculty: bringing best students to academia • Educate students about teaching careers • Private institutes to create role models • Strengthen Ph. D programs • Increase pay package, academic career plan with challenges and exposure

Your Ideas and Suggestions?

What Are the Brightest Indian Youth Likely to Do?

Thank You! http: //faculty. som. yale. edu/shyamsu nder/