Beyond Exit and Voice: User Participation in the Production of Local Public Goods

Two goods commonly provided by local governments-education and neighborhood security-have an enormous impact on day-to-day quality of life. Not surprisingly, these goods generate a great deal of debate. Currently, widespread controversy surrounds proposals to restructure the provision and consumption of education through vouchers. Likewise, private alternatives to public security, such as gated communities, produce reactions ranging from outrage to enthusiasm. School finance and zoning, both of which bear directly on the provision of these goods, are perpetual sources of discussion and dissension. These issues, as well as the larger theoretical questions underlying them, should be of particular interest and importance to legal scholars. After all, legal structures, institutions, and rules determine how these goods will be provided, funded, and consumed.1 Yet legal scholars have failed to generate a convincing descriptive account of how the quality of these goods is determined and how people make choices about consuming them.2 This failure has limited the legal academy's contribution to the public discourse. Legal scholarship has typically assumed that the quality of locally provided goods is driven by some combination of market-like consumer behavior ("exit") and political activity ("voice").3 Although the "exit-voice" framework is useful, it is incomplete with respect to certain kinds of locally provided goods, such as education and neighborhood security. It overlooks the critical role of user behavior-the acts and omissions of the school's students and the neighborhood's residents-in determining the quality of these goods. Everyone intuitively recognizes that the participation of users in "consuming" a good like education or neighborhood security profoundly influences the quality of that good, and in some sense "produces" the good. Indeed, there is significant empirical backing for this intuition, and economists have formalized this and related points.4 Nevertheless, the influence of user participation has not been adequately recognized in legal scholarship, nor have its implications for law been fully explored.5 Because participation is central to quality and users are heterogeneous in their participation, the formation, membership, and internal behavior of user pools should be of great interest for law and policy. An approach that emphasizes user dynamics will yield policy prescriptions that are very different from those generated by the usual exit-voice approach. Moreover, such an approach offers a new vocabulary that can facilitate a more meaningful dialogue about schools and neighborhoods. To develop a useful new way of thinking about local public goods, it is necessary to pin down the nature of the goods themselves: Are education and neighborhood security ordinary consumption goods which consumers should be free to select at will, or are they in some important sense true "public goods"?6 I argue here that they are both and that this dual nature generates an interesting set of strategic dilemmas. Although these goods are consumed by individuals in much the same way as are other consumer goods, they are also "public goods" in the economic sense. For this reason it is appropriate to refer to them, as I do in this Article, as "local public goods."7 The composite pattern of consumption of education or security across an entire community generates a public good-an educated populace, or a safe populace-that is distinct from the consumption good that each individual student or resident obtains by attending a particular school or living in a particular neighborhood. The community as a whole has an interest in ensuring the quality of these goods because everyone in the relevant community experiences (indeed, cannot escape experiencing) their impact.8 These goods, therefore, hold both consumption value and public value.9 My approach thus makes explicit two points that are often suppressed or glossed over in current analyses: that users (students and residents) are themselves involved in producing education and neighborhood security, and that what they are producing is critically important, not only for themselves as consumers but also for everyone else within the larger community. …