In this blog post, we examine how the non-excludability and non-rivalry of public goods influence government decision-making in policy dilemmas.
Unlike private goods, which are consumed by individuals, public goods are goods or services produced for the collective consumption of many people, such as parks. While there are various definitions of public goods, they are not defined by the entity that supplies them but by the nature of the goods or services themselves. Public goods have two characteristics: non-excludability and non-rivalry. Non-excludability refers to the characteristic that a specific individual or group cannot be excluded from using it, while non-rivalry means that one person’s consumption does not reduce another’s consumption. For example, a park is not rendered unusable by one person’s enjoyment; everyone can use it freely.
Government public goods policy aims to promote the public interest, but there are two theories regarding what constitutes the public interest: the substance theory and the process theory. The substance theory views public interest as absolute values agreed upon by society, such as human rights. The process theory denies the connection between public interest and specific entities and emphasizes appropriate procedures in the decision-making process to discover public interest. This concept of public interest serves as an important criterion in the policy-making process and acts as a factor in determining the direction of policy.
When certain public interests are difficult to coexist with others or when conflicting opinions remain equally valid even after appropriate procedures are followed, policy dilemmas are likely to arise. A policy dilemma refers to a situation where it is difficult to choose among incomparable values or alternatives because selecting one alternative results in significant opportunity costs from the unselected alternatives. If such a situation persists, policy implementation may be delayed, controversies may intensify, and overall social costs may increase.
Therefore, governments have consistently sought ways to escape policy dilemmas. Among various approaches to resolving the complexity and uncertainty of policy decisions, the “rational model” explains that it is possible to select the optimal alternative in a dilemma situation by ensuring the appropriateness of the causal relationship between policy objectives and means. It posits that if decision-makers are given sufficient time, budget, and information, they can review all possible alternatives and make rational decisions. However, in reality, such ideal conditions are rarely met, so actual policy decisions are often made based on satisfactory decisions rather than theoretically optimal ones. In contrast, the “satisfaction model” emphasizes decisions that are satisfactory rather than optimal, as it assumes that the conditions required by the rational model will not be met.
It is believed that swift decisions made by decision-makers in a situation of choice eliminate the uncertainty of policy decisions and have a positive effect on society, regardless of the moral or logical attributes of those decisions. The role of the market is expected to allocate resources in an efficient manner, regardless of the decision made. The satisfaction model acknowledges these realistic limitations and seeks to overcome policy dilemmas through second-best choices rather than first-best choices.
The persistence of policy dilemmas sharply increases the overall cost to society. In reality, the more time available for review, the more time-consuming the process becomes, leading to a significant increase in costs due to the persistence of dilemmas. In this sense, the satisfaction model can be adopted as a strategy by decision-makers to avoid falling into a situation of persistent dilemmas, rather than as an inevitable choice due to insufficient time or budget. This approach takes into account the realistic limitations of policy decisions and reflects efforts to minimize social costs through swift decisions.
In conclusion, the nature of public goods and the definition of public interest play an important role in the policy-making process. The non-excludability and non-rivalry of public goods are key factors that the government must consider when establishing and implementing public goods policies to realize the public interest. Additionally, in policy dilemmas, the rational model and satisfaction model provide different strategies based on their respective approaches, enabling the government to seek optimal alternatives. This policy-making process serves as an essential element for promoting the overall welfare of society and realizing the public interest, ultimately helping all citizens to effectively utilize public goods.
