Is Public Housing a Public Good? What is a Public Good?

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This post is triggered by this Headline in today’s (10th Feb 2023) Straits Times article:

Public Housing Public Good
Is Public Housing a Public Good? What is a Public Good? 2

It is a very good, very thoughtful article.

But Public Housing is NOT a Public Good.

What is a Public Good? There are 2 main characteristics:

Non-Excludability, which means that once the good is provided, it is impossible or too expensive to prevent anyone from enjoying the good.

Non-Rivalry, which means that one person’s consumption of the good does not reduce the quantity and quality available for others.

In the latest A Level Syllabus, (see H2 Economics Syllabus and H1 Economics Syllabus), Rejectability is considered the 3rd characteristic. It means that no-one can refuse to consume the good.

Obviously, a HDB flat is excludable. You may not even be able to get a flat even if you are willing to pay anything for it! Obviously, it is rivalrous in consumption. Please do not happily enter and plonk yourself into other people’s flats! And even if you did, it is still rivalrous, as you will be competing for space in the flat. Obviously, it is rejectable. For example, you can choose to buy a private apartment or sleep in West Coast Park (Not East Coast please as I am sleeping there). Nobody is going to force you to buy a HDB flat at gun-point!

The real examples of public goods are National Defense, Street Lighting and Flood Control Systems. Open air parks come close to being a public good and they may be considered quasi-public goods.

So please…public housing is not a public good. Neither is the public toilet (who are you in my cubicle?!?), public library, public school, public hospital…you get my point. So why are they called “public”?

It is provided by the public sector and/or for the general public.

So did Chua Mui Hoong commit an error? Well, she is not writing an economics paper in an economics exam. She is a journalist, writing to the lay audience (general public).

Housing is a necessity and may also be considered a merit good (not sure better ask and attend our economics tuition programme!). So what she means is that public housing must serve the interests of the general public.

Hope this helps! Till next time!

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