Commons and Economic Measurement

07Oct06

One aspect of commons, in my thinking, is that they provide a better measurement of the utility being derived from a good than market transactions do.

The use of market purchases to measure utility is inevitably flawed by the inequality of wealth. If everyone in a particular market had the same wealth and income, then the differences in their bids for the good within the market would reflect the actual differences in their desire for the good and their expected utility from it. As soon as differences in wealth and income enter the picture, this measurement becomes skewed. For just one example, the ratio of vacation time taken by wealthy people to that taken by the working poor does not mean that wealthy people value their vacations more highly. The fact that a poor person has been priced out of market doesn’t mean that he or she does not value the good.

With commons, at the very least, we have an additional measure of social utility in the amount of use, as opposed to money offered. The utility which people derive from parks or roads can be measured purely by the amount of use. The poor have access to them along with the affluent, and we therefore gain a better measurement of the value of this resource to the whole of society.

This ability to measure the actual aggregate utility from commons is true of any good to the degree that its price of use is held close to zero. It makes no difference whether or not the good in question is a public good, or even if it makes sense to provide it as a public commons. The simple fact of its availability for free makes its true social utility measureable.

Of course, with this measurement you don’t automatically get information about how much people would give up in order to use the commons, nor do you get a sense of whether people’s use of the commons is balanced by their productivity, as is expressed by their ability to pay in the private market. But that is part of my issue with contemporary economics: whatever information the market will give you is assumed to be the only part of the story that is important.

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