Forced rider
A forced rider in economics is a person who is required, by government or other collective, to share in the costs of goods or services without desiring them. Such goods are typically non-excludable.[1][2]
Theory
Public goods are non-excludable. As a result, some people may be required to contribute to the cost of public goods they would prefer not to support.[3][4] An example is compulsory tax payments, where the payees have no control on the usage of the taxes. This is called the "forced rider problem".[5] Due to the nature of a non-excludable good, they do still receive the benefits of the good they are forced to pay for via taxation or other compulsory payment.
Forced riders in taxation
The forced rider has been cited in various authors' views concerning taxation.
- Pacifists are required to pay for national defense.[6][7][8][page needed]
- Environmentalists may be required to pay for public works projects, such as dams, which they feel destroy natural habitats in ways they do not condone.[6]
- In a unionized workplace, non-union as well as union members are required to pay dues to the union representing the workplace.[citation needed]
- Healthy and insured individuals being forced via an individual mandate to subsidize insurance for unhealthy and previously uninsured individuals. Previously uninsured individuals are now free riders.[citation needed]
See also
- Free rider problem, an opposite kind of problem with public goods
References
- ^ Cowan, Tyler. "Concise Encyclopedia of Economics". Public Goods. Library of Economics and Liberty. Retrieved 27 February 2013.
- ^ Austrian Methodology: The Preferred Tax Type. Books.google.com. Retrieved 2013-11-30.
- ^ Providing Global Public Goods[dead link]
- ^ Multipart pricing of public goods bbs.cenet.org.cn
- ^ "Public Goods and Public Choices" (PDF). Retrieved 2013-11-30.
- ^ a b "The Myth of Neutral Taxation" (PDF). Retrieved 2013-11-30.
- ^ Richard Cornes Todd Sandler (1994-07-01). "Are Public Goods Myths?". Jtp.sagepub.com. Retrieved 2013-11-30.
- ^ Modern Principles of Economics. Books.google.com. Retrieved 2013-11-30.