The Economics syllabus for the “A” levels has remained stable for many years in Singapore. However, 2023 saw some significant changes to the syllabus.
In particular, the defining characteristics of a public good has been expanded to include “non-rejectable”, in addition to the almost timeless “non-excludable” and “non-rivalrous”.
Perhaps it is still early days, but there has been not much information out there about this concept, and I thought it best to share more here.
Defining Non-Rejectability
The English suggests it all. A good that is said to be non-rejectable, is one which consumers do not have the freedom to reject upon its provisioning by the market, even if they are unwilling to consume it.
In regards to examples of non-rejectable goods, a cursory glance at various schools’ notes and a quick search online throws up the usual suspects: Defence, state infrastructure and so on.
In general, a non-rejectable good has one or more of the following characteristics:
- Non-discriminatory state enforcements (e.g. defence); or
- Non-feasibility in rejection (e.g. sunlight); or
- Is a necessity, with no viable alternatives (e.g. clean water).
How Non-Rejectability leads to missing markets.
Quite simply, the act of rejecting the consumption of a good implies the value of consuming the good to be zero. Therefore, similar to non-excludability, this results in a non-existent demand for the good.
Needless to say, a missing demand schedule, is one half in the creation of a missing market, with the other half being non-rivalry resulting in a missing supply schedule.
The relevance of non-rejectability in defining public goods.
Public goods are defined by the outcome of missing markets in the absence of government intervention. As explained above, missing markets are caused by the combination of:
- Missing supply caused by non-rivalry; and
- Missing demand caused by non-excludability/rejectability.
At first glance, the above might suggest that an either-or approach can be taken with regards to non-excludability and non-rejectability when it comes to missing demand. But of course it isn’t quite that simple.
For example, it might be tempting to conclude that that in cases where a person is denied the privilege of choice in rejecting the consumption of a good, such a good must be a non-excludable one.
Aside from environments that we do not have the means to avoid entirely (e.g. the sun), this is also true of goods where the public are compelled to consume by the state, especially through means of subservience (e.g. the law and defence apparatus).
On the other hand, there are goods that are necessary for humans’ survival and in enabling us to lead a dignified living, borrowing the language of the United Nation’s Sustainable Development Goals:
Perhaps the most pressing and high-profile example would be that of clean water, which in many countries, is made excludable with the imposition of prices for consumption.
To the extent that the debate continues to rage, even amongst renowned Economics thinkers, on whether clean water is actually a public good, the fact that clean water is a basic necessity for survival puts it firmly in the non-rejectable good category.
Practically speaking therefore, for Economics essays in the exams, when the characteristic of non-rejectability is invoked, support can be lent to the argument for the classification of a good as a public good, even if it is somehow excludable in practice.
To achieve this, we can argue that non-rejectability due to clean water being a necessity justifies non-excludability as an end. And with sufficient water processing capacity, non-rivalry can occur as well, allowing clean water to be treated as a public good.
Non-excludability as a sufficient condition for missing demand.
So significant pains have to be made for non-rejectability to act viably as a determinant for a good to be classified as a public one, primarily through the use of non-excludability as the conduit.
But does non-excludability require non-rejectability for a good to be classified as a public good? Probably not.
To see why, consider that non-excludability in itself already results in free-ridership – consumers are not keen on paying for the good even if they desire it. Whether the good is rejectable is in fact irrelevant, because consumers who reject the consumption of the good do not participate in the market anyway.
Therefore non-excludability in itself is a sufficient and also necessary condition for a good to exhibit a missing demand, whereas neither can be said to be true for the case of non-rejectability.
And it is therefore likely for this reason that quoting SEAB’s “A” level Economics syllabus requirements for 2023, only “an awareness of non-rejectability as a characteristic of public goods is required”.
JC Econs 101 