Free goods

I do not seem to get passed scarcity – which is no wonder since it is at the core of economics. Today I read the chapter on the economic problem in my textbook. The author, Alain Anderton, differentiates between economic goods and free goods. He defines economic goods as resources which are scarce, and free goods as resources which are not scarce. Then he continues “In the past many goods such as food, water and shelter have been free, but as the population of the planet has expanded and as production has increased, so the number of free goods has dinimished.”. I think that is an interesting statement and want to go a little bit deeper into it.

As an example he uses clean beaches in the UK. He states that these have ceased to be a free good since “pollution has forced water companies and seaside local authorities to spend resources cleaning up their local environment.” I would say beaches are scarce to begin with, since they can be allocated alternatively. An entrepreneur could establish a beach club on part of the beach, making it accessible only to paying customers, or it could be fenced of to the public to protect the habitat of animals living in this tidal area. The entrepreneur would keep the beach clean, for she wants customers – who will not pay for a polluted beach – to return. The nature conservation institution will keep the beach clean, to protect its wildlife. When the beach has free access it is in fact a common, and we – the public enjoying the beach – have to take care of it and keep it clean, ultimately through tax paid to the local authorities.

A definition used in Dutch education differentiates between scarce and free goods – mind you, not between scarce and free resources – by asking if resources – factors of production – have been used to produce the goods. Using this definition, I could say clean beaches are scarce goods, since resources have been used to clean up the beach. However, may I ask, what is the source of the pollution in the first place?

The largest contributor of beach pollution is waste – waste from ships travelling across the sea, and from seaside visitors, mostly plastics1:

Results of the 2017 British Beach Clean – copyright Marine Conservation Society.

Waste is an externality of consumption. This externality – the cost of waste disposal – is not reflected in the price of products packaged in plastics. Do externalities change the nature of the goods affected by it?

I think we first have to differentiate between resources and goods. A resource that has alternative applications – like a beach – is a scarce resource. A particular stretch of beach may not have alternative applications because of its climate, location or layout. Then that particular stretch is not scarce. Its one and only application could be conservation of wildlife. The resource in itself is still not scarce, but the good – conservation of wildlife – is, since resources are necessary to manage this stretch of beach – including cleaning it. As soon as scarce resources are used to produce goods, like a clean beach, it is a scarce good.

When a particular stretch of beach is alternatively applicable, but the local authority grants it to the public, the enjoyment of the beach is a scarce good, since a scarce resource has been used – the beach – to produce it – no matter how high the level of pollution and the need to clean it.

Having said that, I do feel that a distinction between scarce and free goods is diverting us from the real issue – as stewards of the earth we should not pollute our resources – scarce or not. But how can you prevent people on ships from throwing waste overboard, and how can you make seaside visitors take their debris home?

How can you use this in your lessons?

I would say: don’t. Distinguishing between free and economic goods is not part of the Edexcel A specification as far as I can tell, and there are better tools available to explain the economic problem.

I wanted to get across that there are, in fact, no free goods. The resources available to us we must take care of, as well if they are not alternatively applicable. Even resources we normally consider free, like rain and sunlight, we managed to pollute, by emissions of chemicals from factories, power generating facilities, and cars – thus damaging the ozone layer, and causing acid rain.

  1. Great British Beach Clean Results 2017, Richard Harrington, 30 November 2017, Marine Conservation Society