Not Another Pledge Drive (Please!)

As an avid NPR Morning Edition listener, there is one thing I absolutely hate about the fall: pledge drive week. I really only want two things. First, I want Steve Inskeep, Renee Montagne, and David Green to tell me what I need to know that day. Second, I don't want to pay for it. National Public Radio is an example of a public good as it is both non-rivalrous and non-excludable. It is non-rivalrous because someone else listening to NPR (or in my case Morning Edition) does not affect my ability to listen to NPR/Morning Edition. It is also non-excludable since once the radio signal is broadcast, it would be very difficult to exclude someone from being able to receive and listen to it. This puts me in an exceptional position as a consumer of Morning Edition because I can exploit one of the limitations of the Coase Theorem by being a free rider. 

As Gruber describes in chapter 5, the public sector under-provides public goods because of the free-rider problem, which occurs when an investment has a personal cost, but a common benefit. This will lead individuals to underinvest. I, as a consumer of public radio, have a reluctance to contribute to NPR during pledge week. Any contribution that I make will cost me personally and will benefit everyone who listens to NPR. Thus, I have an incentive to not contribute. Public radio is especially vulnerable to the free rider problem because there are many consumers nationwide. Because public radio is vulnerable to the free rider problem, there is a potential role for the government to improve efficiency and fund public radio. This episode of Planet Money discusses the potential need for government intervention in public radio. On the one hand, because it is a public good, there is an argument to be made for the government to step in to combat under-provision and improve the public radio being produced. On the other hand, they mention the possibility of advertisements and big donors which could both fund NPR enough for it to be produced at the optimal level. In the case of advertisements, the advertisers would be the consumers (and the listeners would be the product). Since advertising is rivalrous (when one ad fills a slot, that slot cannot go to another ad) and excludable (if the advertiser does not pay, their ad is not run), this would convert public radio from a public good to a private good. This means the government would not need to act. The conversation, unfortunately, ends without a conclusion on whether government intervention is necessary in the case of public radio. As for me, for right now, I'll continue to be a free rider. Sorry, NPR (not really).