# Public Goods Explained: Definition, Examples & How They Work

![Public Good](https://www.investopedia.com/thmb/iazRvbAJoz9sScR18oK2HwXg-cw=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Term-Definitions_publicgood.asp-9aa537878b404c3393cb87845e26f9d2.jpg)

*— Tara Anand / Investopedia*

> **Definition**
>
> A public good is a commodity or service available to all members of society without reducing its availability to others, typically provided by the government and funded through taxes.

## What Is a Public Good?

A public good is a commodity or service that every member of a society can use without reducing its availability to all others. Typically, a public good is provided by a government and funded through taxes.

Examples of public goods include town roads, parks, and schools. National defense is also a public good. Public goods can also include basic needs like clean air and drinking water.

### Key Takeaways

*   Public goods are characterized by their non-rivalrous and non-excludable nature, meaning they can be consumed by many without depleting availability and are accessible to all citizens.  
    
*   Common examples of public goods include national defense, clean air, and public parks, which are typically funded through taxation to benefit all members of society.  
    
*   The "free rider problem" occurs when some individuals consume a public good without contributing to its funding, leading to debates over taxation and spending.  
    
*   The distinction between public and private goods lies in their consumption: private goods are rivalrous and excludable, often requiring payment and limiting access.  
    
*   Some resources, known as quasi-public goods, exhibit qualities of both public and private goods, like public museums that may charge an entrance fee while still receiving public funding.

## Understanding the Mechanisms of Public Goods

The main criteria that distinguish a public good are that it must be non-rivalrous and non-excludable. Non-rivalrous means that the goods do not dwindle in supply as more people consume them. Non-excludability means that the good is available to all citizens.

The point of contention is called the free rider problem. Public goods are available to everyone, whether or not they have paid for them. Some members of society use the good but are unable or unwilling to help pay for it. Those who don’t pay taxes are essentially taking a "free ride" from those who do.

### Note

National defense, law enforcement, and clean air and water are all examples of public goods.

## Comparing Private and Public Goods

The opposite of a public good is a [private good](https://www.investopedia.com/terms/p/private-good.asp), which is both excludable and rivalrous.

Private goods can only be used by one person at a time—a piece of jewelry, for example. In some cases, they are destroyed in the act of using them, such as when a slice of pizza is eaten.

Private goods generally cost money. Most of the goods and services that we [consume](https://www.investopedia.com/terms/c/consumer-spending.asp) or use in our everyday lives are private goods. Although they are not subject to the free rider problem, they are also not available to everyone, since not everyone can afford to purchase them.

Sometimes, public goods aren't fully non-rivalrous or non-excludable. For example, a town swimming pool is a public good open to all residents, but it might charge a small fee.

Some goods are "quasi-public" because, even though they are available to all, their value decreases as more people use them. For instance, roads are accessible to all citizens, but they lose value when congested during rush hour.

## Global Perspectives on Public Goods

Every nation makes its own decisions on which goods and services should be considered public goods, and this is reflected in their national budgets. For example, many argue that national defense is an important public good because the security of the nation benefits all of its citizens.

Many countries heavily [invest](https://www.investopedia.com/articles/investing/072115/how-military-spending-affects-economy.asp) in their militaries, funding army maintenance, weapons, and [R&D](https://www.investopedia.com/terms/r/randd.asp) through taxes. In the United States, for example, the Department of Defense (DoD) has a budget of $1.52 trillion, equal to 12.8% of the total federal budget for the 2023 fiscal year.

Many countries consider essential services like [healthcare](https://www.investopedia.com/articles/personal-finance/080615/6-reasons-healthcare-so-expensive-us.asp) and education as types of public goods. Taxpayer-funded healthcare is provided by nations including Canada, the United Kingdom, France, Germany, Italy, and Israel.

Government investments in public education have grown tremendously since the 1950s. According to Our World in Data, the percentage of the world’s population that has received at least some basic education has grown from about 49% in 1950 to more than 86% in 2020 (the most recently available data).

Advocates argue that government spending has economic and social benefits like better workforce participation, skilled industries, and lower poverty rates. Critics say it burdens taxpayers and that the private sector can provide these goods more efficiently.

## What Counts as a Public Good?

A public good is any product or service that is available to all residents of a society, such as national defense, police and fire services, clean air, and drinking water.

## What Are the Main Differences Between Private and Public Goods?

A private good is consumed exclusively by one person. Most often, there is a cost associated with it that prohibits its use by some others. A private good is available to all. One person’s use of it does not prevent others from using it.

## What Is a Quasi-Public Good?

Quasi-public goods have elements of both public and private goods. A public bridge is available to all but loses some of its value when it becomes congested during rush hour. A public museum is open to all, and may even receive some public funds, but it may still charge an entrance fee to adequately finance its operation.

## The Bottom Line

A public good is a commodity or service that every member of a society can use without exhausting the supply of it that is available to others. National defense, effective policing, clean air, and public education are all examples of public goods.

Private goods, unlike public goods, are inherently scarce and become more scarce as people consume them.  

> **Article Sources**
>
> 1.  USAspending. “[Department of Defense (DOD)](https://www.usaspending.gov/agency/department-of-defense?fy=2023).”
>     
> 2.  New York State Department of Health. “[Foreign Countries with Universal Healthcare](https://www.health.ny.gov/regulations/hcra/univ_hlth_care.htm).”
>     
> 3.  Bonneau, Cécile, via Paris School of Economics. “[The Concentration of Educational Investment in the U.S. (1970–2018), with a Comparison to France](http://piketty.pse.ens.fr/files/Bonneau2019.pdf),” Page 15 (Page 19 of PDF).
>     
> 4.  Ritchie, Hannah et al., via Our World in Data. “[The Evolution of Education Outcomes](https://ourworldindata.org/global-education#literacy).”